The IMF-monitored Rs14.46tr budget improves wages and pension.
Under pressure from the IMF, Ishaq Dar proposed a Rs14.46 trillion budget for FY2023-24.Under pressure from the IMF, Finance Minister Ishaq Dar proposed a Rs14.46 trillion budget for FY2023-24 on Friday.Prime Minister Shehbaz Sharif’s coalition administration upped federal government employees’ pay and pensions in its second budget on Friday to match growing prices. Federal government employees in BPS 1 to 16 would receive a 35 percent ad hoc rise, and those in BPS 17 and above would receive 30 percent. 17.5pc rise for pensioners. The EOBI pension rose to Rs10,000 from Rs8,500, and the minimum wage rose to Rs32,000 from Rs25,000.
Dar announced the salary hike after the cabinet approved it. He said federal government employees’ mileage allowance was increased by 50% and their additional charge/current charge/deputation allowance was raised from 12,000 to Rs18,000. Orderly allowance was raised to Rs25,000 from Rs17,500, while disabled special conveyance allowance was doubled to Rs4,000. The finance minister announced an increase in military constant attendant allowance to Rs14,000 from Rs7000. The House Building Finance Corporation scheme for indebted widows was announced in the 2023-24 budget. Widows would receive one million rupees in HBFC loans from the government under the scheme. Ishaq Dar increased the deposit limit on martyrs’ CDNS accounts and Behbood Saving Certificates to Rs7.5mn from Rs5mn.
Dar told the National Assembly that the government’s goals were 3.5 percent GDP growth, 21 percent inflation, and 6.5 percent budget deficit. Foreign remittances are estimated to exceed $33bn, while export targets are $30bn. Public Sector Development Programme (PSDP) budget is Rs950bn. Under the National Finance Commission (NFC), the government will transfer Rs5.27tr to the provinces from gross receipts. The government’s net revenue will be Rs6.887tr. Rs14.46tr is the budgeted expenditure. Current expenditures are estimated at Rs13.32tr. Debt servicing, including local and foreign loan interest payments, will take up a large amount of Rs7.3tr. The second-largest allocation is Rs1.804tr for defence. Grants and payments to provinces would total Rs1.464tr, while pension spending will total Rs761bn.
State Bank of Pakistan’s
People have struggled due to the rupee’s devaluation and the State Bank of Pakistan’s policy rate increase, the minister said. However, the government sacrificed political benefits to improve the economy. At a time when inflation is rising, the expansionary budget may impair the government’s efforts to control inflation. Tax increases may worsen the price issue. Instead of austerity, the budget emphasises spending.Rs6.924bn, or 6.5 percent of GDP, is the budget deficit. The government will borrow from local and foreign lenders to fill this gap, even if the IMF plan has had hiccups and will finish on June 30, 2023. For fiscal year 2024, the government aims to have a primary budget surplus of Rs379bn.
Interestingly, the proposal to hike the fuel charge from Rs50 to Rs60 per litre may minimise the impact of salary rises for government officials while hitting the private sector’s ordinary man. Compared to the revised projection of Rs542bn in the outgoing fiscal year, the government hopes to collect Rs869bn in the coming year.The government has permitted individuals to bring in up to US$100,000 to Pakistan without disclosing their sources of income. The ceiling was Rs50 million in Pakistani rupees, but it was converted to dollars to enhance foreign exchange reserves.The budget rationalises the Super Tax under Section 4C, which applies to all persons with income over Rs150 million. Three new income slabs have been introduced: Rs350 to Rs400 million at 6pc, Rs400 to Rs500 million at 8pc, and Rs500 million and beyond at 10pc.