Pakistan’s towering fiscal deficit & budget FY23

By Hamza Ameer

Islamabad, June 10 (SocialNews.XYZ) Pakistan's Finance Minister Miftah Ismail has conceded his government's inability to provide any relief to the middle class in FY23 budget, which is being presented before the Parliament on Friday.

The only relief proposed in the budget is for government employees, who are expected to get a raise of at least 15 per cent in salary and pension. However, the middle class of Pakistan will have to suffer the brunt of inflation, high interest rates and soaring prices of basic commodities.

Ismail will present the Rs 9.5 trillion budget in the National Assembly of Pakistan for the fiscal year 2022-23 (FY23).

The budget presentation comes after the National Economic Council (NEC) set next year's economic growth rate target at 5 per cent with a consolidated public sector investment of Rs 2.184 trillion.

It is pertinent to mention that on Thursday, Ismail painted a very bleak picture of the exploding current account and fiscal deficits, stating that the current budget would be laying the foundation for economic stability through growth with responsibility and sustainability.

The set back also comes with reference to the ongoing negotiations with the International Monetary Fund (IMF), which were hoped to be finalised before the budget. However, with ongoing negotiations being done on regular basis, the government hopes that a staff-level agreement will be reached in the coming days.

Ismail started his presentation in the National Assembly by slamming the previous government of Imran Khan, who he said had hurt the economy and damaged the lives of the country's masses.

"An inexperienced team brought the country to the brink. Different people tabled the budget every year, presenting different policies which hurt investor sentiments," he said.

"Our government began repairing the economy by taking tough decisions that were the need of the hour. The government had to move towards sustainable growth. Our target for next year's growth is set at 5 per cent," he added.

Ismail said the country's problem is a deviating balance between growth and current account deficit that loses control when growth increases.

"The problem of our economy is that growth is at 3 to 4 per cent, but when it moves up to 5 to 6 per cent, our current account deficit goes out of control because we give priority to the elite, which increases our imports. We need to adopt new thinking to facilitate the lower-income section to increase domestic production," he said.

The key points of the 2023 budget include:

• Minimum tax bracket for small business persons to be raised from Rs 0.4 mn to Rs 0.6 mn

• Minimal taxable income limit will be raised from Rs 0.6 mn to Rs 1.2 mn per year on salaried class

• 15 per cent increase in salaries of government employees

• Sales tax exemption on import of solar panels and distribution

• Advance withholding tax will be collected from those sending remittances abroad via credit, debit and pre-paid cards

• Advance tax will be increased on cars above 1600 cc

• Exemption of complete customs duty on pharmaceutical ingredients

• Rs 51 bn proposed for education projects

• Rs 24 bn proposed for health sector

Source: IANS