Islamabad: Pakistan has targeted a fiscal deficit of 4.3 percent of GDP in the 2015-16 financial year, down from 4.9 percent envisaged in 2014/15, Finance Minister Ishaq Dar told parliament on Friday as he unveiled the budget.
Figures already released by the government show the South Asian nation of around 190 million people expects the economy to grow 5.5 percent in 2015/16 (July-June), up from 4.2 percent in the outgoing financial year.
The National Assembly’s budget session started at 16:52 hrs on Friday with the recitation of verses of the Holy Qura’an.
Speaker National Assembly Sardar Ayaz Sadiq was chairing the session.
Delivering the budget speech for the next fiscal on the floor of the house, Finance Minister Ishaq Dar confirmed that GDP growth in 2014-15 was 4.2 percent, short of the 5.1 percent target.
According to figures released on Friday, Pakistan expects budget revenues to rise to 4.3 trillion rupees ($42 billion) in 2015-16, up from 4.0 trillion in 2014-15.
Spending was also set to increase to 4.1 trillion rupees in the coming financial year (July-June) against 3.9 trillion in 2014/15.
PSDP Allocation Highlights
Rs348.926 million will be spent on new development schemes and completion of ongoing projects in the petroleum sector.
The government has allocated Rs 9134.525 million for different ongoing and new projects in Finance Division under Public Sector Development Programme (PSDP).
Rs.2.458 billion for completion of ongoing schemes and the new development schemes in the Defence Division for the year 2015-16.
Rs900 million has been for completion of ongoing schemes. The total cost of the projects is Rs5.640 billion while Rs3.727 billion has already been spent on the projects.
Rs321 million for Pakistan Nuclear Regulatory Authority (PNRA)
Rs3.900 billion for the new development scheme and completion of ongoing projects
Rs165 million for Textile Industry Division
Rs1.5 billion has been earmarked for the development of agriculture sector. Rs1.4 billion has been set aside for the completion of 16 on-going projects and 89.939 million for 7 new schemes in the agriculture sector.
Ports & Shipping
Rs12 billion has been allocated for Ports and Shipping Division. The government has set aside Rs5.223 billion for six ongoing schemes while Rs6.7 billion has been earmarked for eight new sachems of the Ports and Shipping Division.
Rs800 million has been earmarked for the on-going projects of Pakistan Space and Upper Atmosphere Research Commission (SUPARCO). According to the budgetary document released here Friday for project Pakistan Remote Security Satellite (PRSS) (China), approved in July 2013, Rs. 300 million would be acquired through foreign assistance while Rs. 500 million would be reserved from the national resources.
Anti Narcotics Spending
Rs230.425 million has been allocated for Narcotics Control Division.
A sum of Rs 41,000 million has been reserved for Railways Division.
A budgetary document says Rs882 million is allocated for acquisition of land for railways container yard station and railway line from sea port up to coastal highway at Gwadar.
Rs 2,795 million for mechanization of track Maintenance while Rs1000 million has been earmarked for procurement and manufacture of 75 new D.E locomotives.
Rs654.188 million for Cabinet Division for five ongoing and two new schemes.
BISP & Baitul Mal
Allocation for Benazir Income Support Programme (BISP) has been increased from 97 billion to 102 billion, while the funds for Pakistan Baitul Maal have also been doubled to Rs4 billion from Rs 2 billion.
Rs30.40 billions for Pakistan Atomic Energy Commission (PAEC)
Federal Minister for Finance Ishaq Dar Friday said that Rs 71.5 billion had been allocated in the budget 2015-16 for Higher Education Commission (HEC).
The federal government has allocated Rs 609.553 million under Public Service Development Programme (PSDP) for the ongoing projects of Inter Provisional Coordination (IPC) Division for the fiscal year 2015-16.
Rs2.59 billion for the new and ongoing schemes of the Ministry of Housing.
Rs185 billion has been allocated in the budget of 2015-16 for highways sector projects, comprising motorways, highways, bridges, tunnels, and regional roads.
Duty on Mobile Phones Abolished
Federal Minister for Finance and Revenue Ishaq Dar announced that regulatory duty on mobile phones would be abolished in the next fiscal year (2015-16).
The minister, in his budget speech, said sales tax on import of different mobile phones had been raised from Rs150, 250, 500 to Rs. 300, 500 and 1,000 respectively.
He said on appliance of new tariff, the regulatory duty on mobiles had been abolished.
Builders (minimum tax) to be exempted till June 30, 2018
Dar on Friday said the minimum tax on builders for construction and sale of homes and other buildings would be exempted till June 30, 2018.
Govt to start health insurance scheme in 23 districts
Dar also announced that the government would provide medical support to deserving people for treatment of critical diseases under the Prime Minister’s Health Insurance Scheme.
In a budget speech, the minister said that the premium cost of this scheme during year 2015-18 would be Rs 9 billion and initially the scheme would be launched in 23 districts.
He said that during next three years, the area of this scheme would be expanded to provide this facility to 60 percent poor people of the country.
He said that under this scheme, secondary medical coverage would be provided to people of areas of Federal Capital, FATA, Gilgit-Baltistan and Azad Kashmir.
The minister said that to select beneficiaries, Benazir Income Support Program’mes (BISP) score card would be used for this purpose. He said that under PM Youth Business Loan Scheme so far 15,000 loans have been approved while 20,000 applications are under consideration.
He said that under PM youth skill development scheme, so far 20,000 youth have been facilitated while the training process of further 25,000 youth is in final stages.
He said that under PM scheme for provision of laptops, so far 70,000 laptops have been distributed.
He added 700 laptops have been developed at local level through state-of-the-art plant.
Rs100bn allocated for return of TDPs
Rs100 billion has been earmarked for return of Temporarily Displaced Persons (TDPs) to their homes and security enhance in the Budget 2015-16.
According to Dar, TDPs will be sent to their homes enabling them to restart their lives in a dignified manner.
He said the nation has rendered invaluable sacrifices in fight against terrorism but there was a need of long-term efforts for complete eradication of this menace.
Acknowledging the sacrifices of armed forces in the ongoing military Operation Zarb-e-Azb, he said the cowardly activities of terrorists remind that the war against terrorism has not finished yet.
Rs 12 billion were earmarked in the budget 2015-16 to establish universal e-tele centres in the country.
Besides providing e-agriculture, e-commerce and e-learning services, these centres would also ensure SIM card verification and registration, he said during the budget speech in the National Assembly.
The minister said in the first phase all provinces, including Federally Administered Tribal Areas (FATA), 500 tele-centres would be established and for the purpose 217 sites had already been selected.
This programme was near completion and would soon be operational, he added.
Rs2.8bn Fibre Optic Link
Dar said that the government has decided to spend Rs2.8 billion to link remote areas of the country through Fiber Optic Cable.
Dar said 128 tehsils are being linked with this Cable in consultation with all provinces.
He added that a sum of Rs 3.6 billion would be spent on another project of linking unserved and remote areas with advanced ones.
Will Pakistan Meet The Targets?
The shortfall underlines the challenges the government of Prime Minister Nawaz Sharif faces in meeting next year’s forecasts, with daily power shortages curtailing industrial production and abysmally low tax collection.
Even if Pakistan does hit its target, it is short of what the country of more than 180 million people needs, economists said.
Considering our population, to generate enough employment for a growing workforce our GDP (growth) should be around 7 percent plus,” said Muzzammil Aslam of the think-tank Emerging Economics Research.
The government has not given official forecasts of spending and revenues next year, but economists said expenditure was likely to top 4 trillion rupees (around $40 billion).
Dar said recently that Pakistan’s fiscal deficit would fall to 4.3 percent of GDP in the next financial year compared with an original target of 4.9 percent in 2014/15.
He added the deficit could have been narrowed further in 2015/16, but for a major military operation against militants in tribal areas along the Afghan-Pakistan border and the costs of accommodating thousands of people displaced by the violence.
Defence spending next year will be set at 772 billion rupees, including 45-50 billion for the operation, an increase of 10 percent over 2014/15.
One of the biggest challenges facing the government will be to broaden the tax base in a country where only about one in 200 citizens files income tax, leaving the state having to ask donors to fund crumbling schools and hospitals.
With many legislators, ministers and businessmen believed to evade taxes, mustering the political will to push through reform could prove difficult.
Nevertheless, Pakistan’s Federal Board of Revenue has targeted a 19 percent increase in tax receipts to 3,100 billion rupees for 2015/16.
Imports of liquefied natural gas through a new port facility in Karachi should help make power supplies more reliable, although there have been teething problems at the terminal.
Infrastructure projects should be boosted by a $46 billion deal signed with China earlier this year to open up a road and energy corridor between the two countries.