In the post-budget press conference in Islamabad, Pakistan’s Minister for Finance and Revenue, Ishaq Dar, declared that the country has achieved economic stability.
Ishaq Dar’s assertion was made against the nation’s struggle for external financing and the looming risk of default. Notwithstanding these challenges, Dar expressed confidence in Pakistan’s economic resilience and potential to amplify the economic growth rate.
Stabilizing Measures and Aspirations for Growth
This positivity comes when Pakistan strives to secure a $1.1 billion loan. This loan forms part of a broader $6.5 billion bailout package orchestrated by the International Monetary Fund (IMF). The package has been on hold since November, representing the longest delay since at least 2008, with over 100 days since the last staff-level mission to Pakistan.
Dar emphasized that these stabilizing measures were necessary to set a strong foundation for future economic growth. He reiterated, “Now that Pakistan has achieved economic stability, we will move towards increasing the growth rate.”
Key Budgetary Figures and Projections
The finance minister revealed some key targets regarding budgetary figures for the fiscal year 2023-24. The government hopes for GDP growth of 3.5%, while inflation is expected to hover around 21%. Furthermore, they target a fiscal deficit of 6.54% of GDP, a slight decrease from the current year’s revised estimate of 7%.
Interestingly, a sizeable portion of the budget, approximately Rs950 billion, has been earmarked for development projects. These projects are perceived as potential vote-winners ahead of the impending general elections later this year. In addition, the budget includes measures aimed at pleasing the populace, such as pay rises for civil servants of up to 35% and a 17.5% increase in state pensions.
The Legacy of the Previous Government and Plans for the Future
During his address, Dar did not miss the opportunity to critique the previous Pakistan Tehreek-e-Insaf-led government. He blamed them for the hike in the country’s debt. Despite this criticism, Dar radiated optimism for future economic growth, provided the budgetary targets were successfully met. He stated that the country’s economic wheel would turn smoothly if growth were achieved.
The Launch of Two Committees in the FBR
In a significant administrative move, Dar announced the formation of two committees within the Federal Board of Revenue (FBR). One committee will handle business-related matters, while the other will address technical issues and anomalies. Dar assured that these committees would commence work soon and continue until the parliament ratifies the budget.
Fiscal Deficit and the New Federal Budget
Regarding the federal budget, Dar provided figures related to the federal deficit. Before including the provincial surplus, the deficit stood at Rs7,573 billion (-7.2%). After accounting for the surplus, the figure drops to Rs6,932 billion (-6.54%). Dar also revealed that the nominal GDP for the next fiscal year is estimated to be Rs105 trillion.
Public Sector Development Program (PSDP)
The Public Sector Development Program (PSDP) is prominent in the budget, particularly concerning the health, education, social, and transport sectors. The provincial development budget has been allocated Rs1,559 billion, while the federal government’s development budget is Rs1,150 billion. Dar was confident that the targeted 3.5% growth could be easily realized with the correct implementation of the PSDP.
