Minister for Industries Hamad Azhar has presented the federal budget for the fiscal year 2020-21 – referred to as the “corona-budget” by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh – yesterday during a press conference to unveil the economic survey for fiscal 2019-20.
Among the major figures he revealed on the floor of the National Assembly, the Federal Board of Revenue (FBR) revenue target was kept at Rs4.95tn for next year while defence allocations amounted to around Rs1.3tn.
The federal development programme was budgeted at Rs650bn to support growth prospects.
Prime Minister Imran Khan also attended the session.
Azhar started the session by saying that it was an honour for him to be presenting the second budget of the Pakistan Tekreek-e-Insaf (PTI) government under the leadership of Prime Minister Khan.
He then went on to highlight some of the major achievements of the government in the outgoing fiscal year, pointing to a 73% decline in the current account deficit, which is now under $3bn.
“There is also a primary surplus which we achieved in the past nine months,” he said.
In the background of Azhar’s speech, loud slogans against the premier and table-thumping by the opposition benches could be heard as the minister highlighted the PTI-led government’s efforts to streamline the economy.
Later, the opposition walked out of the House in protest.
Azhar said that “our budget deficit shrank from 5% to 3.8% while the International Monetary Fund (IMF) gave us an extended facility of Rs6bn, and remittances increased from Rs16bn to Rs17bn”.
He noted that Bloomberg had called the PSX (the Pakistan Stock Exchange) the top performing market in Dec 2019.
Presenting details of the new budget, the minister emphasised that “no new tax was introduced in this budget”.
Azhar said that the need of the hour is an expansionary fiscal policy, which the government is implementing.
He said that the total size of the budget, or the total expenditure budget for the next year, was Rs7,136bn, slightly higher than the budgeted figure for the previous year.
Of this total, the current expenditure for the next fiscal was budgeted at Rs6,345bn, higher than the Rs6,193bn budgeted last year, Azhar said.
Of this, Defence Affairs make up Rs1,289bn, with interest payments making up Rs2,946bn.
The minister revealed that development expenditure for the next fiscal year had been budgeted at Rs1324bn, of which federal Public Sector Development Programmes (PSDP) had been budgeted at Rs650bn.
The fiscal deficit, he said, would be 7% of the GDP and has been budgeted at Rs3,195bn for FY2021 (fiscal year 2020-21).
Azhar lamented that the deficit had been increased manifold under previous governments, but said that this government would try to keep it in check.
The minister said that the government will pull the economy out from a 0.4% contraction and is aiming for a 2.1% growth in GDP for fiscal year 2021.
Total revenue, he said, is budgeted at Rs6,573bn, of which net federal revenue will be Rs3,700bn.
Azhar went on to reveal that of this total revenue, the FBR tax collection has been budgeted at Rs4,963bn, which is lower than the original budgeted amount of Rs5,555bn in last year’s budget.
The minister stressed during his speech that the government wants this to be a relief budget due to the crisis brought on by the coronavirus pandemic, and the government is imposing no new taxes for the new year.
This year’s budget session is being seen as a formality, as both the Pakistan Peoples Party (PPP) and the Pakistan Muslim League – Nawaz (PML-N), the major opposition parties, have agreed not to press for voting on cut motions and not to point out quorum till the passage of the budget by June 30.
The budget comes as the country tackles the ongoing health crisis caused by the outbreak of the novel coronavirus, which has shaken the economy.
It was finalised after talks with the IMF and it was agreed that the federal government would freeze the size of its expenditures.
Presenting the Economic Survey of Pakistan 2019-20 at a press conference on Thursday, Special Adviser to the Prime Minister on on Finance and Revenue Shaikh spent a large part of his speech building a narrative around inheriting a troubled economy and putting it on road to recovery before the coronavirus pandemic hit economies of the world and Pakistan.
The adviser said that it remains very difficult to quantify the accurate impact of the coronavirus on the economy, but there was no doubt that it had been really hit hard and that different institutions are making different projections based on quantum, severity and duration of the pandemic.
Shaikh said that the government had no intention to go for aggressive taxation, but this did not mean that those who were rich would not be made to pay their due taxes.
Austerity and belt-tightening remain the focus of the upcoming budget, for which every section and arm at the federal and provincial level would be required to contribute and sacrifice.
With the FY2021 finance bill, the government aims to give a strong message to the world that it is “fiscally responsible despite severe challenges” and will prudently utilise whatever fiscal space becomes available through international flows.
Besides a tight lid on civil expenditures, subsidies would be targeted and reduced, debt would be smartly structured and cash disbursements for relief and stimulus would be linked to the availability of fiscal space to rein runaway fiscal pressure.
Fiscal deficit is being targeted around 9% of the GDP.
No fresh posts would be created during the year and utmost care would be taken in filling unavoidable posts.
Generally, vacant posts for over six and nine months would be considered for abolition.
Similarly, the posts and ministries of devolved subjects would be actually transferred to the provinces including higher education and major hospitals in major cities.
In order to ensure that the social distancing policy to prevent the spread of the coronavirus is followed, the opposition and government have agreed that only a maximum of 86 members (one-fourth of the total 342-member house), 46 from the treasury and 40 from the opposition, will be present in the house at any one time.
The terms of the agreement, which were called guidelines for ensuring implementation of the standard operating procedures, were read out on the floor of the house by none other than by the PPP’s Syed Naveed Qamar on the directive of Speaker Asad Qaiser at the outset of the sitting on Wednesday.
According to the accord, the members and the staff of National Assembly Secretariat who have not got themselves tested for Covid-19, the disease caused by the coronavirus, would not be allowed to enter the hall.
The proceedings of the house will continue for maximum of three hours daily until June 30.
The opposition will not point out quorum, except on the day the budget would be voted upon.
Qamar further said that the chief whips of the parties would be responsible for providing the lists of the attending members on a particular day, and only those members whose names were present in the lists would be allowed to come to the house.
Explaining further points, the PPP leader said that there would be no need for the members to come to the assembly hall for attendance as they could mark their attendance at the main entrance, known as Gate No 1.
The Jamiat Ulema-e-Islam-Fazl (JUI-F), however, not only rejected the agreement, terming it “unconstitutional and illegal”.
Members of the JUI-F also staged a sit-in in front of the dais of the speaker to protest the removal of their chairs from the house, as only 86 chairs were placed in the house after the agreement.