Finance minister presents federal budget 2024-25 in National Assembly. Aurangzeb announces upto 25pc increase in salaries, 15pc in pensions. Inflation expected to remain at 12pc. budget deficit at 5.9pc of GDP. Minimum wages increased to Rs37,000 from Rs32,000 n Govt proposes to impose 18pc tax on mobile phones. Tax will be taken on prices of vehicles instead of engine capacity. Opposition tears budget documents in protest.
ISLAMABAD – In lines with the International Monetary Fund (IMF), the Pakistan Muslim League-Nawaz (PML-N) led coalition government Wednesday presented the annual budget 2024-25 with total outlay of Rs18.9 trillion and deficit of Rs8.5 trillion amid heavy taxation measures and increasing civil servants salaries upto 25 percent and pension by 15 percent.
Federal Minister for Finance and Revenue Muhammad Aurangzeb presented the annual budget 2024-25 in the National Assembly after getting approval from the special cabinet meeting, which was chaired by Prime Minister Shehbaz Sharif. The House witnessed uproar throughout the proceedings as the opposition members were seen blowing whistles, hooting and tearing copies of the bill and throwing in the air to create the mess. Some members from treasury benches Tariq Fazal Chaudhary, Aoun Chadhary, Ameer Maqam, and Atta Tarar made a protecting shield near the Prime Minister’s seat.
The government has increased the salaries of civil servants from BPS1 to BPS 16 by 25 percent and by 20 percent for BPS-17 to BPS-22. Pensions have enhanced by 15 percent. It has increased the minimum wage rate to Rs37000 per month from Rs32000 per month. The total outlay of the budget is Rs18.9 trillion for the next fiscal year with the deficit of Rs8.5 trillion (5.9 percent of the GDP). A major chunk of budget would be utilized by the interest payment, which is estimated at Rs9.8 trillion. The government has allocated Rs1.014 trillion for pension, Rs2.12 trillion for defense, Rs1.363 trillion for subsidies, Rs839 billion for running the civil government and Rs313 billion allocated for provision of emergency and others. The government has earmarked Rs1.67 trillion for development and net lending.
The Finance Minister informed the house that the economic growth target is set at 3.6 percent for the next fiscal year while inflation rate at 12 percent. He said that the tax collection target for the Federal Board of Revenue (FBR) has set Rs12.97 trillion, which is Rs3.7 trillion higher than the revised target of the current fiscal year. Meanwhile, the non-tax collection target has been fixed at Rs4.8 trillion. The share of provinces in the federal receipts will be Rs7.438 trillion.
The opposition, holding placards inscribed with the picture of Imran Khan, shouting slogans entered the house. From the start of the budget speech till the end, the opposition members kept raising anti-government slogans. “Go-Shehbaz Go ‘‘, “Go-Nawaz- Go ‘’ and slogans in the favour of their party leader echoed in the house. The house unprecedentedly saw a thin presence at treasury benches as a large number of PPP members stayed away from the proceedings. Opposition leader Omar Ayub was also seen pro-actively spearheading protests in the house, as he folding sleeves engaged all the opposition members to register strong protest. The opposition, holding pictures of former Prime Minister Imran Khan, raised slogans to release Imran Khan immediately. The emotional opposition members, raising anti-government slogans, were about to engage in a physical altercation when some senior member controlled the situation.
“We have heard the talk of all political parties to sit together in the country’s interest several times. Today, the nature has provided Pakistan with another chance to walk on the path of economic progress and we can’t afford to waste this opportunity,” he said
The Finance Minister said that the government is negotiating with the IMF for Extended Fund Facility (EFF) for homegrown reforms. The EFF would help in building the country’s foreign exchange reserves, macroeconomic and fiscal stabilization, reforms in the power sector and state-own entities (SOEs).
The government has announced plans to abolish vacant posts in federal departments, which would help in saving Rs45 billion annually. The Finance Minister informed that the government is working to reduce the volume of pensions by adopting a three pronged strategy. Under the strategy, the government would follow the international best practices for reducing pension liability, introducing contributory pension schemes for new pensioners and establishing pension funds for managing the liabilities.
He informed that the government would complete the privatization of Pakistan International Airlines (PIA) by August this year. Meanwhile, it would also outsource the Islamabad International Airport in the first phase, which would be followed by outsourcing the Lahore and Karachi Airports. The government would also privatize the Roosevelt hotel, House Building Finance Corporation, First Women Bank and others.
The Finance Minister said the government has allocated Rs13.8 billion for export refinance scheme as against Rs3.8 billion of the outgoing year. He said that an export credit facility of Rs539 billion would be provided through the State Bank of Pakistan. He said under the SMEs strategy, the credit for small and medium enterprises will be enhanced to Rs1100 billion from Rs540 billion, and the addition of Rs100 billion would be made in the next fiscal year.
For the agriculture sector, the government has announced Rs5 billion as Markup and Risk Sharing Scheme for Farm Mechanization under the Kissan Package announced by Prime Minister Shehbaz Sharif in 2022. He said under the scheme, financing will be available to procure planters, tractors, thrashers, harvesters, and mobile grain dryers.
The government has allocated Rs206 billion for water resources in which 45 billion rupees have been set aside for Mohmand dam, 40 billion for Diamer Bhasha dam, 18 billion rupees for Chashma Right Bank Canal and Rs10 billion for Pat Feeder Canal.
The Finance Minister said Rs253 billion have been set aside for the energy sector. For the IT sector, he said Rs79 billion have been earmarked under which seven billion rupees will be for digitalization and reforms in the FBR. This amount will help expand the tax base and address loopholes by using state of the art IT system. The IT Park will be established in Karachi at a cost of Rs8 billion while Rs11 billion will be set aside for Technology Park Development Project in Islamabad. The Finance Minister said over Rs86.9 billion has been proposed in the budget to facilitate the Pakistani diaspora. This amount will be spent on reimbursement of TT charges.
Referring to the challenge posed by climate change, the Finance Minister said the government is undertaking several steps to give impetus to climate mitigation efforts. For this purpose, he said that the Pakistan Climate Change Authority will be made functional. He said that a national Climate Finance strategy will be prepared by October this year with the aim to bring global climate finance to Pakistan which will help implement projects to reduce carbon emission.
Muhammad Aurangzeb said the government is allocating four billion rupees for E-bikes and two billion rupees for energy efficient fans.
He said that a special package is proposed for the development of Karachi, as it was the mega city of the country and plays a vital role in the country’s economy, adding that it was a prerequisite to initiating a comprehensive program for modernizing the basic infrastructure of the city. The minister said that under the direction of the prime minister, to modernize the health infrastructure in Islamabad, Rawalpindi, AJK,KP and other areas, a comprehensive plan was devised to provide the latest and best medical services to the people of these areas.
The government has also proposed to increase GST on Tier-1 Retailers of textile and leather products from fifteen to eighteen percent. It has also been proposed to impose standard rate of eighteen percent tax on mobile phones.
It has also been suggested to impose withholding tax on scrape of copper, coal, paper and plastic, while exemption from sales tax on iron and steel scrap has also been proposed in the budget to discourage tendency of fake or flying invoices.
The Minister said that exemption in taxes for five years was given to newly merged districts, erstwhile FATA and PATA, in 2018. This exemption ended in 2023, which was later extended for one more year. However, now this exemption is being withdrawn gradually to bring these areas into national mainstream.
Similarly, the exemption in income tax given to residents of erstwhile FATA and PATA has been extended for one more year.
The Minister said a fixed tax of 12 percent annually is currently enforced on unpaid sales taxes and FED, which is being increased by KIBOR+3 percent in order to harmonize it according to policy rate of the State Bank of Pakistan.
The minister said taxes on vehicles’ registration and purchase up to 2000 CC were taken on the basis of engine capacity. However, it has been proposed in the budget that tax on all the vehicles would be taken on prices of vehicles instead of its engine capacity as it was enforced earlier.
