Budget 2023/2024 in Pakistan

The 2023-24 budget for Pakistan, presented by Finance Minister Ishaq Dar, outlines several key areas of focus and allocations:

1. Economic Growth and Deficit Budget:- The government is targeting a GDP growth rate of 3.5%. The current account deficit is projected at $4 billion, down from the previous year’s $26 billion, showing an improvement in trade balance​.
2. Defense and Public Sector Development: The defense budget has been increased by 13% to Rs1.8 trillion. Meanwhile, Rs1.15 trillion is allocated for the Public Sector Development Program (PSDP) to support infrastructure and development projects​ according to Dawn News.
3. Salaries and Pensions: Government employees will see a salary increase of 30% to 35% depending on their grade. Additionally, the minimum pension has been raised to Rs12,000​ ​​according to Business Recorder!
4. Subsidies and Social Welfare: Rs1.1 trillion is earmarked for subsidies, including targeted subsidies for essential food items like wheat flour, ghee, pulses, and rice. The Benazir Income Support Programmer’s allocation has been increased from Rs400 billion to Rs450 billion​​.
5. Education and Health: Rs10 billion has been allocated to provide 100,000 laptops to students, and Rs22.7 billion is designated for the health sector. Additionally, Rs1 billion is allocated for health insurance for working journalists​.
6. Agriculture and Energy: The agriculture credit limit has been increased from Rs1,800 billion to Rs2,250 billion. Significant investments are made in the solarization of 50,000 agriculture Tube Wells and subsidies for imported urea​​.
7. Tax Policies: The budget includes tax reliefs such as exemption from sales tax for freelancers with exports up to $2,000 per month and the removal of duties on imported seeds and machinery for solar energy. However, it also introduces increased withholding tax rates for non-residents and a 10% final tax on bonus shares​ ( Business Recorder).

Budgets Aim and Object and Who Gained and Lost in the Budget Announcement on Friday

Inflation forecasted to average at 21% and Tax-to-GDP ratio to stand at 8.7%

Current account deficit to stand at $6 billion by end of fiscal year 2023-24 and Government has allocated Rs1.8 trillion for defense spending!

• Rs1.1 trillion earmarked for subsidies
• Rs761 billion allocated for pension
• Government will spend Rs950 billion on account of Public Sector Development Program.
• Rs22.7 billion earmarked for health sector
• Agriculture credit limit enhanced from Rs1,800 billion to Rs2,250 billion
• Solarization of 50,000 agriculture Tube Wells through Rs30 billion
• Withdrawal of all duties and taxes on imported seeds, combined harvesters, dryers and rice planters
• Rs10 billion earmarked for PM’s Youth Business and Agriculture Loans scheme
• Rs6 billion subsidy announced on imported urea
• Targeted subsidy announced on wheat flour, ghee, pulses and rice
• 35% increase in salaries of government servants of grade 1-16 in the form of ad-hoc relief
• 30% increase in salaries of government servants of grade 17-22 in the form of ad-hoc relief
• Tax free imports of software and hardware by IT and IT enabled services equal to 1% of their exports with a ceiling of $50,000
• No sales tax return by freelancers with exports of $2,000 per month
• Increase in Benazir Income Support Programmed allocation from Rs.400 billion to Rs.450 billion
• Upward revision in pensions and increase in minimum pension to Rs.12,000
• Rs10 billion set aside for provisions of 100,000 laptops for students
• Exemption of custom duty on import of raw material for batteries, solar panels and inverters

Economic growth target fixed at 3.5% for fiscal year 2023-24 in Pakistan?

Overall, the budget aims to balance growth with fiscal responsibility, though it has faced criticism for not broadening the tax base sufficiently and for increasing the tax burden on formal sectors​