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Here’s What To Expect From The Federal Budget Tomorrow

Here’s What To Expect From The Federal Budget Tomorrow


The Pakistan Tehreek-i-Insaf (PTI) led government is all set to finally present its first Federal Budget for the fiscal year 2019-20 in the National Assembly tomorrow.

Prime Minister Imran Khan

The plan for the budget is to prioritise fiscal management; revenue mobilisation; measures for economic stabilization and growth; reduction in non-development expenditures; boosting exports besides providing relief to the masses; promoting investment for job creation and “people friendly” policies for the socio economic prosperity of the country.

This seems like a lot, but what does this even mean? What should we expect from tomorrow’s budget?

The overall budget will be Rs 6.8 trillion

The estimated value of the budget is Rs 6.8 trillion, a significant rise from last years budget of ₨ 5.159 trillion. The projected deficit created from the federal budget is projected to be Rs. 3 trillion, as opposed to the previous Rs 1.8 trillion budget deficit. The increase in the budget was expected by most, as we just took new IMF loans this year. But is it as bad as it sounds?

Most countries operate with a certain amount of debt. For example, the United States owes more than a trillion dollar debt to the Chinese government, yet they’re still on top of the world. Having a large amount of deficit is not indicative of danger. But it does make spending money for the government more restricted. So in cases of emergencies, which our governments face pretty often, we may not have enough money to handle the situation.

A “people- friendly” budget means more money is spent on social welfare

Many people within the government keep talking about the budget’s friendly nature for the people of Pakistan. While these vague terms could literally mean anything, in this case it most likely means the government will increase spending on social welfare projects and job creation. Projects similar to the Ehsas programme, which are designed to help alleviate poverty, will all fall under the new budget.

The PTI has shown a propensity to start social welfare projects, so we’re expecting the budget to reflect such a change. The expected money to be allocated to developmental projects is Rs 925 billion.

Another way that the government will help with job creation is through easy loans for the unemployed youth. The federal cabinet may also approve a nominal increase in salaries and pensions of employees by 10 to 15 percent against skyrocketing inflation.

Overhaul to taxation scheme

Part of the problem with the Pakistani economic system is that people do not pay taxes properly.

As a result, the government is expected to introduce measures for bringing improvements in the system of tax collection, broadening the tax base, and facilitating the taxpayers. They have said and argued that strong revenue generation will play a crucial role in achieving the targets for economic growth. The government is likely to set the revenue collection target at Rs 5.55 trillion for the fiscal year 2019-20.

Rumour is, the government is going to propose Rs 1.250 billion non-tax revenue during the next fiscal year. In a move to meet the revenue target the government is likely to increase sales tax on sugar from 8-17 percent. Besides increase in taxes and duties on poultry products, electronic and dozens of other items are also being proposed in the next budget.

The defense budget will remain the same, despite what the army initially stated

While the army initially stated that they were going to cut down their budget, it is now being reported that the defence budget will increase to Rs 1.2 trillion from last years Rs 1.1 trillion. The budget figures of the defense sector usually do not give a complete picture as it does not include the Rs 260 billion pension of retired soldiers, Rs 45 billion of security enhancement and undeclared allocations for major weapon procurements and strategic programme, so the actual amount spent on security might be unknown.

But most of this is speculation by financial analysts. We’ll have to wait till tomorrow to find out what the federal budget actually entails.