Federal Cabinet approves Rs 1150 billion Development Program
ISLAMABAD: The federal cabinet today approved Rs 1150 billion Development Program for the fiscal year 2023-24.
The cabinet approved the uplift plan on Friday in its meeting held to accord approval to the new budget.
Prime Minister Mian Muhammad Shehbaz Sharif chaired the meeting of the cabinet after Friday prayer.
Finance Minister Senator Muhammad Ishaq Dar is presenting the new budget for 2023-24 in the National Assembly.
Finance Minister Senator Muhammad Ishaq Dar is presenting Rs 14.5 trillion new budget in the National Assembly for the fiscal year 2023-24.
In the new budget, the government has projected fiscal deficit around 7 percent of the GDP.
The development spending is expected around Rs1.15 trillion while economic growth target is 3.5 percent for 2023-24.
Meanwhile, the government set the Federal Board of Revenue tax collection and non-tax revenue targets
Tax Collection Target Rs 9.2 trillion for 2023-24
Non-Tax revenue collection target Rs 2.7 trillion
Total Revenues Rs 11.9
To achieve the non-tax revenue target, the federal government is amending the finance bill to enhance the petroleum development levy (PDL) from existing Rs 50 per liter to Rs55-60 per liter.
This will enable the government to mop up Rs 870 billion massive non-tax revenue just from the PDL in 2023-34 budget, starting from July this year. For the outgoing fiscal year, the revised estimate of PDL collection is Rs550 billion.
Hence, in 2023-24, the government will try to raise Rs 320 billion additional revenue through increase in the PDL rate.
In the new budget for 2023-24, the federal government has projected 3.5 percent GDP growing against 0.29 percent in the outgoing fiscal year.
The budget appears a tough task for the coalition government as it would have strike a delicate balance between voters’ friendly budgetary measures while meeting IMF conditions.
Since elections are expected within this CY23, it is true that government will try to present a vote-winning budget.
Key features of new budget for 2023-24
The key challenges for the government are to achieve the below-mentioned targets:
- The total outlay for the fiscal year 2023-24 is estimated at Rs14.5 to Rs14.70 trillion (12.4% to 14.2% of GDP) as against the budget of Rs9.6tr in FY2022-23.
- The fiscal deficit target is expected to be Rs6.8tr in FY24, which would be around 6.5% of the GDP.
- Ministry of Planning has set a GDP growth target of 3.5% for FY24 as compared to 0.29% GDP growth expected within FY23.
- The revenue collection target for FBR has been set at Rs9.2tr (8.76% of GDP) for FY24, up by 23% YoY as compared to the budget target of Rs7.5tr for FY23.
- The non-tax revenue will be Rs2.5tr (2.4% of GDP) as compared to Rs1.6tr (2% of GDP) estimated for FY23.
- The total expenditure target has been set at Rs14.6tr for FY24 (13.9% of GDP), which is around 12% YoY higher than budgeted in FY23.
- The government is likely to set aside Rs7.6-8tr for interest payment for the FY24 budget and Rs1.8tr is likely to be set aside for the Defense sector.
- For pension, the government is expected to set a target of Rs780bn for FY24 as opposed to Rs550bn budgeted in FY23.
- The government is likely to set a target of Rs980bn for power subsidies, however, the Energy Ministry has demanded Rs1.54tr in power subsidies for FY24.
- The current expenditure is expected to rise 15% YoY, worth Rs13.2tr for FY24. This uptick in current expenditure is mainly due to higher interest expenses up by a significant 30% YoY against the budget of FY23.
- The development expenditure is expected to be at Rs1.35tr in FY24 against Rs964bn in FY23.
- The public sector spending (PSDP) target for FY24 will be at Rs950bn against Rs727bn budgeted in the FY23.
- The Planning Ministry is also proposing an allocation of Rs150bn through Public Private Partnership
- Assuming no current account deficit and debt rollover by friendly countries and their
- institutions, a shortage of $4-6bn in FY24 is expected.
- Overall manufacturing sector is expected to project a growth of 4.3%, followed by agriculture sector growth of 3.5% and service sector growth of 3.6% for FY24.
- Investment level for FY24 is projected to be set at 15.1% of the GDP as compared to 13.6% set in the FY23 budget.
- National Savings Rate is expected at 13.4% of GDP.
- Inflation for FY24 is expected to be around 21% as compared to 29% for FY23 and compared to the 8-10% historical average
- The ministry is expected to set aside Rs7.6tr for debt servicing.
