ISLAMABAD: The government will present a budget worth about Rs 8,000 billion for the new financial year in Parliament today in which salaries are likely to be increased by up to 25 per cent. Finance Minister Shaukat Tarin, who unveiled the Pakistan Economic Survey 2020-21 a day earlier, will present the PTI-led government’s budget. The session will begin at 4:00pm.
According to sources in the finance ministry, the federal budget is more than Rs 8,000 billion, of which Rs 3,105 billion is for interest payments, Rs 1,330 billion for defense and Rs 5,829 billion for FBR tax collections. Additional revenue measures worth Rs350 billion are also expected. For FY22, the government is expected to earmark Rs900bn for federal PSDP, an increase of 38pc from the previous budget. A key element is total development outlay, which includes provincial spending. It is expected that the government will set a provincial spending target of Rs1tr, taking the total development outlay to Rs1.9tr compared to last year’s budgeted outlay of Rs1.3tr (up 44pc).
The current account deficit for FY22 is projected to be around $2.3bn which would be less than 1pc of the GDP. The cotton bales output expected for FY22 would be around 10.5m bales.
All these expected measures together are likely to keep pressure on fiscal balance. Maintaining fiscal stability and improving fiscal health while adopting a pro-growth and expansionary fiscal policy will be a real challenge for the government. Successfully striking this balance depends largely on successful negotiations with the IMF.