ISLAMABAD: The government on Friday presented federal budget for fiscal year 2017-18 with a total outlay Rs 4.75 trillion against last year’s Rs 4.068 trillion, showing an increase of 16.7%.
Presenting the budget in the National Assembly, Finance Minister Ishaq Dar said it was the first time in the history of the country that an elected government was presenting the fifth consecutive budget. He recalled that Pakistan was on the verge of default in 2013 when PML-N took over and the economy had been declared ‘unstable’ on the basis of macroeconomic indicators. “However, economy is on the right track now,” he claimed.
According to the budget documents, the budget for fiscal year 2017-18 would be financed through Rs 3.913 trillion from internal resources and Rs 837 billion from the external resources.
The minister said that the tax collection target for the upcoming fiscal year has been set at Rs 3,521 billion, while the tax to GDP ratio was expected to be at 13.2%. The long-term loan facility for the overall industries sector has been set at 6%, while for the textile sector it is 5%. He said the currently foreign exchange reserves stand at $16 billion, which come up to $21 billion after adding the bank reserves. He said the reserves were adequate enough for four months of imports.
According to the budget documents, the government aims to achieve an investment to GDP ratio of 17% and an inflation rate of less than 6%. It hopes to keep the fiscal deficit at under 4.1% of the GDP.
The government aims to achieve tax revenue target of Rs 4.330 trillion, with Rs 4.013 trillion in taxes collected by the Federal Bureau of Revenue (FBR) and Rs 317 billion in other taxes. The non-tax revenue was targeted at Rs 979.9 billion.
On the expenses side, the government has allocated Rs 3.477 trillion for current expenditures and Rs 1.275 trillion for development expenditure. The budgeted current expenditure included Rs 1.363 trillion in interest payments, Rs 248 billion in pensions, Rs 920 billion for defence affairs and services, Rs 430.2 billion for grants and transfers, Rs 138 billion in subsidies, and Rs 378.8 billion for the running of the government.
The minister said that Rs121 billion would be allocated for the Benazir Income Support Program (BISP), which was three times its allocation in the 2013 budget. He said an investment of Rs97 billion was being undertaken in the Pakistan Stock Exchange. He said that women would be given representation in listed companies as well as representation in boards of governors.
On the exports sector, which had showed a negative growth, the minister revealed that the customs duty on the export of raw hides had been suspended.
The sales tax on the commercial import of fabric would be set at 6%. The minister also announced the setting up of an Information Technology Park in Islamabad in collaboration with South Korea. An allocation of Rs49 billion has been made for the health sector.
Highlighting the energy sector reforms, Ishaq Dar said 10,000MW would be added to the national grid by 2018. “Load shedding will be history,” he claimed. He said that 15000MW would be added to the grid in later years.
The supply of gas had improved and load shedding had completely abolished for industries. He hoped that load shedding would completely end from next year.
An amount of Rs180 billion had been earmarked for CPEC-related development projects in the country.
The minister announced a decrease in withholding tax for registration of vehicles for filers of tax returns. Registrations of 850cc vehicles would now cost Rs 7500, 1000cc vehicles would now cost Rs 15000 and that of 1300cc would cost Rs 25000. No decrease in charges for non-filers was announced in the budget.
Talking about the corporate tax, Dar said it had been brought down from 35% to 30% as promised by the government. A raise in the regulatory duty on betel nut from 10% to 25% had been proposed along with a Rs200/kilogram regulatory duty on the import of paan.
The minister also presented a recommendation to end the 5% regulatory duty on the import of raw materials related to the poultry industry. He also informed of a reduction in customs duty in the poultry business from 11% to 3%. Special persons would get a 2% job quota in listed companies as per the newly passed companies act, the minister announced.
The minister also proposed a uniform regulatory tax of 9% on the telecommunications sector and announced relief package on duty for electric cars. The budget of the Pakistan Baitul Maal was raised from Rs 4 billion to Rs 6 billion.
The government was also set to launch a scheme for the payment of HBFC loans for widows. The scheme was valid for widows who have not remarried.
