ISLAMABAD: The federal cabinet is likely to approve a Rs 4.4 trillion federal budget for the fiscal year 2016-17 on Monday (today).
Ailing Prime Minister Nawaz Sharif will chair the cabinet meeting from London through video link. Sharif is in London for an open-heart surgery. This is the first time in Pakistan’s history that the federal cabinet is going to approve the budget in this manner.
According to the sources, the government is likely to impose Rs 288 billion new taxes in the upcoming budget on the directives of the International Monetary Fund (IMF).
The Annual Plan Coordination Committee (APCC) in its meeting on May 27 proposed Rs 1.675 trillion allocation for the Public Sector Development Programme (PSDP) – Rs 800 billion for the federal government and Rs 875 billion for the provincials governments. The government is likely to set the gross domestic product (GDP) growth target at six percent for the next financial year.
The GDP growth target for the ongoing year was 5.5 percent. According to the Pakistan Bureau of Statistics, the GDP growth remained 4.7 percent this year.
An amount of Rs 900 billion is likely to be earmarked for defence in the upcoming federal budget. The defence budget for the outgoing financial year was Rs 770 billion. The government is going to set a tax recovery target of Rs 3,600 billion for the Federal Board of Revenue (FBR) for the fiscal year 2016-17. The tax recovery target for the outgoing fiscal year was Rs 3,104 billion.
The government has decided to announce special concessions for new investors in the next budget. These concessions are likely to be given on the import of automobiles, agricultural machinery and pharmaceutical products. The government also plans to announce a package for the promotion of Islamic banking in the country.
According to the data released by the Pakistan Bureau of Statistics, the government of the Pakistan Muslim League-Nawaz (PLM-N) has failed to meet almost all economic targets. The agriculture growth target for the outgoing year was set at 3.9 per cent, but the government could achieve only a growth target of 0.9 percent. The government set the exports target of $ 25.5 billion for the outgoing fiscal year. However, the export target achieved in the first 10 months of the current fiscal years is $17 billion. The government set Rs 3,104 billion revenue collection target for the FBR, which is struggling to achieve this target. Same is the case with the foreign direct investment; the government set the target of 16.5 percent and the target achieved so far is 15.5 percent.
After approval of the budget from the federal cabinet, Finance Minister Ishaq Dar will present incumbent government’s fourth budget in the National Assembly on June 3.
In a related development, the National Economic Council (NEC) is due to meet in Islamabad on Monday (today) to debate the Rs1.675 trillion Public Sector Development Programme (PSDP) for 2016-17. Prime Minister Nawaz Sharif will preside over the meeting from London through video link. Chief ministers of all four provinces and their financial advisers will attend the meeting.
The NEC is the supreme constitutional body that decides annual allocation of development and non-development expenditure for the federal and the provincial governments.
The federal government is going to spend billions of rupee on energy-related projects in the next financial year to overcome the prevailing power crisis, as it has proposed Rs 157 billion for seven power projects. The government is going to allocate Rs 261 billion for transport and infrastructure in the next fiscal year compared to Rs 220 billion in the last fiscal year.