The federal budget for the fiscal year 2024-25, with a total outlay of 18,877 billion rupees, was announced today by Finance Minister Muhammad Aurangzeb. The budget focuses on fiscal consolidation, supporting productive sectors, and providing relief measures for the common man.
Presenting the budget in the National Assembly, the Finance Minister stated that the gross revenue receipts are estimated at 17,815 billion rupees. This includes the Federal Board of Revenue’s (FBR) revenue collection of 12,970 billion rupees and non-tax revenue of 4,845 billion rupees. Provinces will receive a share of 7,438 billion rupees from federal receipts.
The government projects a growth rate of 3.6% for the next fiscal year, with inflation expected to be around 12%, a budget deficit of 5.9% of GDP, and a primary surplus of 1% of GDP. Interest payments will total 9,775 billion rupees.
To provide relief, the government announced a 25% increase in the salaries of government employees from Grade-1 to 16 and a 20% increase for Grades 17 to 22. Pensions for retired government employees will rise by 15%, and minimum wages will be increased from 32,000 to 37,000 rupees.
The coalition government remains committed to supporting vulnerable segments of society. The budget for the Benazir Income Support Programme (BISP) is being increased by 27% to 593 billion rupees. The number of recipients under the Kafalat program will increase from 9.3 million to 10 million, and cash transfers to these families will be enhanced to protect them from price hikes. Additionally, one million more children will be added to the education stipend program, bringing the total number of scholarships to 10.4 million. Another 500,000 families will be included in the Nashonama program in the next fiscal year.
The government will launch poverty graduation and skills development programs under the BISP to promote economic inclusion and well-being. A hybrid social protection program will also be introduced to ensure financial independence for beneficiaries.
The Finance Minister emphasized the government’s commitment to boosting exports. The export refinance scheme will be enhanced from 3.8 billion to 13.8 billion rupees, and an export credit facility of 539 billion rupees will be provided through the State Bank of Pakistan. The Prime Minister has directed that this facility should be available to at least 40% of the SME sector. Credit for small and medium enterprises (SMEs) will be increased from 540 billion to 1,100 billion rupees, with an additional 100 billion rupees allocated for the next fiscal year. This step is expected to be a lifeline for the export sector.
In the agriculture sector, the government has proposed 5 billion rupees for the Markup and Risk Sharing Scheme for Farm Mechanization under the Kissan Package announced by Prime Minister Shehbaz Sharif in 2022. This aims to offer financing for the planters, tractors, threshers, harvesters, and mobile grain dryers.
For water resource management, 206 billion rupees have been earmarked, including 45 billion rupees for Mohmand Dam, 40 billion for Diamer Bhasha Dam, 18 billion for Chashma Right Bank Canal, and 10 billion rupees for Pat Feeder Canal.
The energy sector will receive 253 billion rupees, while the IT sector will get 79 billion rupees. This includes 7 billion rupees for digitalization and reforms in the FBR to expand the tax base and address loopholes using state-of-the-art IT systems. An IT park is set to be established in Karachi at a cost of 8 billion rupees, with an additional 11 billion rupees allocated for the Technology Park Development Project in Islamabad.
To facilitate overseas Pakistanis, the government has proposed 86.9 billion rupees in the budget, which will be spent on reimbursement of TT charges and digitizing the immigration landscape to simplify procedures. For overseas Pakistanis, “Mohsin-e-Pakistan” award is being introduced to recognize their exceptional contributions.
In education, substantial funds have been proposed to improve infrastructure and facilities in 167 government schools in the federal capital. A school meal program will be introduced to provide balanced and nutritious food to students in 200 primary schools in Islamabad. Additionally, pink buses will be introduced to transport female students from rural to urban areas, and Danish schools will be expanded to Islamabad, Balochistan, Azad Kashmir, and Gilgit-Baltistan.
The government is also addressing climate change with several initiatives. The Pakistan Climate Change Authority will be made functional, and a national Climate Finance strategy will be prepared by October to attract global climate finance. A National Digital Climate Finance Monitoring dashboard will be established to maintain data on foreign assistance, and gender and climate budget tagging will be integrated into government budgeting and accounting.
Furthermore, 4 billion rupees have been allocated for E-bikes and 2 billion rupees for energy-efficient fans. The privatization of PIA, Roosevelt Hotel, House Building Finance Corporation, and First Women Bank will be accelerated, with Islamabad International Airport being the first to be outsourced.
The development budget is set at a historic level of 1,500 billion rupees, with 1,400 billion rupees allocated for the Public Sector Development Programme (PSDP) and an additional 100 billion rupees through public-private partnerships. The defence budget will be 2,122 billion rupees, while 839 billion rupees have been reserved for civil administration expenses, 1,014 billion rupees for pensions, and 1,363 billion rupees for subsidies on electricity, gas, and other sectors.
Grants worth 1,777 billion rupees have been earmarked for BISP, AJK, Gilgit-Baltistan, merged districts, Higher Education Commission, Pakistan Railways, and the IT sector.
The budget underscores the government’s commitment to developing infrastructure, transportation, energy, and IT sectors while addressing water resource management challenges. Priority will be given to completing ongoing projects, with 81% of resources allocated for these and 19% for new projects. Ten percent of resources have been set aside for AJK, Gilgit Baltistan, and tribal districts, with 11.2% for sectors such as IT and telecom, science and technology, and governance.
A total of 824 billion rupees have been proposed for infrastructure, including 253 billion for the energy sector, 279 billion for transport and communication, 206 billion for water, and 86 billion for planning and housing. The social sector will receive 280 billion rupees, with 75 billion for special areas including AJK and Gilgit-Baltistan, 64 billion for tribal districts, and 79 billion for science and IT. Fifty billion rupees will be allocated for the production sector, including agriculture.
Priority will be given to strategic and core projects, including water resources, transportation, communication, and energy. Timely completion of foreign-funded projects will be ensured, particularly those with 80% of resources already spent.
New projects aimed at promoting exports, competitiveness, digital infrastructure, industrial development, agro-industry and seed development, blue economy, science and technology, and research and development will be encouraged. The annual development plan also includes measures for sustainable and balanced development.
The government will emphasize upgrading infrastructure, including highways and linkages between major cities and areas, expanding energy infrastructure with hydro-power dams and solar power plants, and ensuring efficient power distribution. Water management will be improved to cope with floods and ensure availability for domestic and agricultural use.
The development budget also includes measures for skills development to equip youth with modern knowledge and training, enabling them to secure employment and contribute to the country’s development.
Karachi’s significance in economic development is acknowledged, with a comprehensive project proposed for the city and additional projects for Hyderabad, Mirpur Khas, Sukkur, and Benazirabad. The K-IV project will be completed to improve water supply in Karachi.
A new project titled “Quaid-e-Azam Health Tower” will be initiated at the Pakistan Institute of Medical Sciences in Islamabad to modernize hospitals in the capital.
The government is implementing tax law reforms to ensure equity and justice, proposing to withdraw certain sales tax exemptions and impose standard rates on previously exempt goods. A gradual withdrawal of income tax exemptions for erstwhile FATA and PATA residents is also planned, with a one-year extension granted.
To reduce government expenditures, the Finance Minister announced a three-pronged strategy to reform the pension system and introduce a contributory pension scheme for new employees. A pension fund will be established to manage liabilities.
The government is negotiating extended fund facilities with the IMF while advancing its homegrown reform agenda, which includes macroeconomic and fiscal stabilization, enhancing foreign exchange reserves, better debt management, and power sector and state-owned enterprise reforms.
The Finance Minister expressed confidence that Pakistan will achieve inclusive and sustainable growth through these reforms, transforming from a government-determined economy to a market-driven one. He noted that inflation has decreased to 12% in May, making essential commodities more affordable, and predicted further reductions in inflation, benefiting the common man.
The National Assembly will reconvene on the 20th of this month at 5 p.m. to continue discussions on the budget.
