ISLAMABAD: Finance Minister Ishaq Dar presented Pakistan's federal budget for the year 2013-14 in the National Assembly on Wednesday.

According to the government's proposed budget unveiled in parliament, the Pakistan Muslim League- Nawaz (PML-N) government expects Pakistan's 2013-14 fiscal deficit to narrow to 6.3 per cent of gross domestic product.

The proposed budget of Rs 3.5 trillion is expected to be funded partially by tax revenues of around 2.75 trillion rupees, Dar said.

To read the complete text of the finance minister's budget speech, click here.

The finance minister said that the government will spend the bulk of the development budget on the energy sector and that a total of Rs 225 billion have been allocated for the purpose.

Dar said that Rs 59 billion have been allocated for the construction of new dams.

The budget, aims at restricting power sector losses, is expected to do so by bringing down subsidies and gradually increasing electricity tariff for all consumers.

The finance minister announced that the government was looking to take austerity measures to bring the economy back on track.

Dar said that the government was hoping to save Rs 40 billion from the government's kitty by pursuing its planned austerity drive.

He said that the government had decided to freeze and scrap all secret funds for all ministries, except fot national security agencies.

"Yesterday, the Ministry of Finance has issued necessary instructions for immediate ceasing of such of such expenditures and return of unspent balances. Simultaneously, the allocations for the next year have been cancelled," he said.

Dar added that the Prime Minister's discretionary fund had also been scrapped, and that the expenses of the Prime Minister's House will be brought down by over 40 per cent.

He also announced that 3G telecom licenses will be auctioned and foreign exchange reserves will be raised to $20 billion in three years.

Dar said the government plans to build the road network infrastructure across Pakistan. He said that the motorway network will be expanded.

He also announced that the Gwadar sea port will be linked to the northern areas of the country through a road link. He also announced that the Pakistan Railways will be converted into a corporation.

Taxation

Dar said that Pakistan's tax-to-GDP ratio during the previous PML-N government in the 90s was 13.8 per cent, however, that figure had plummeted to only 8.9 per cent.

He said that the government planned to bring tax-to-GDP ratio back up to 15 per cent.

He said that the government's objective was to make tax evaders pay taxes, and widen the tax net.

"An effective tax system focuses on direct taxes. Unfortunately, our tax system focuses more on indirect taxes," said Dar.

The finance minister said that the government had proposed to bring General Sales Tax up from 16 per cent to 17 per cent.

A new 0.5 per cent levy to be imposed on movable assets, to be channeled to Income Support Program. Dar said that he would introduce the levy by volunteering himself.

The finance minister announced that a new adjustable withholding tax will be introduced on foreign films and dramas.

In an announcement welcomed by the house, the finance minister said that the government had planned to grant 100 per cent exemption all duties and taxes to imported eco-friendly hybrid cars up to 1200cc.

Micro-finance scheme

The finance minister also announced a new micro-finance scheme for entrepreneurs.

"It is decided to allocate Rs.5 billion to launch a scheme of Qarze-Hassana (loans without mark-up). These will be made available through selected micro finance providers including 49 Akhuwat, NRSP and Provincial RSPs. at least 50 percent of those benefiting from these markup-free loans will be women," he announced.

Public Sector Development

The PML-N government has earmarked Rs 78 million for the Human Rights Division in Public Sector Development Program (PSDP) for the year 2013-14.

The government has earmarked Rs. 18490 million for the projects of Higher Education Commission (HEC) in the Public Sector Development Programme (PSDP) for the year 2013-14.

A total of Rs 15928.627 has been allocated for ongoing schemes while Rs. 2561.373 has been allocated for the new schemes.

Meanwhile, the government has allocated Rs 5 billion under the Public Service Development Programme (PSDP) for special programmes. The amount has been allocated for Tameer-e-Pakistan Programme.

Rs.315 million have been allocated for the Textile Industry Division projects.