ISLAMABAD: With less than a month to present the next fiscal year’s budget, the government is contemplating holding meetings of the Annual Plan Coordination Committee and the National Economic Council on May 23 and June 1, respectively, to finalise over Rs900bn worth of federal Public Sector Development Programme (PSDP).
And even before these events, representing both the Centre and its federating units, the federal government would hold another two important meetings this week.
These include a meeting of the National Accounts Committee to finalise national accounts to quantify the performance of various economic sectors during this fiscal year.
Another one will be a special session of the federal cabinet to clear the budget strategy paper for the next fiscal year envisaging more than Rs1 trillion worth of subsidies, mostly for the energy sector, about 3.5pc GDP growth rate, about 21pc inflation and more than Rs9tr of revenue target for the Federal Board of Revenue.
APCC expected to meet on May 23, National Economic Council on June 1
The taxman is already facing a shortfall of about Rs400bn to meet the current year’s revenue target. Non-tax revenues are projected to go beyond Rs2.5tr, with major contributions from the central bank’s profits and petroleum development levies of about Rs900bn and Rs800bn, respectively.
Finance Minister Ishaq Dar officially announced last week that the budget for the 2023-24 fiscal year would be presented in the parliament on June 9.
Under the Public Finance Management Act 2019, the government is required to get the upcoming budget strategy paper approved by the federal cabinet by April 15, but this could not be done amid political turmoil in the country and a stalled IMF bailout package.
Officials said the meeting of the National Economic Council — the highest economic decision-making body of the federation — had been scheduled for June 1 or 2.
The council is led by the prime minister and includes four chief ministers and as many federal ministers, whereas the prime minister of Azad Jammu and Kashmir and the chief minister of Gilgit-Baltistan are special guests.
A Planning Commission official said a Rs900bn federal PSDP was tentative at this stage, as a final round of engagements between the finance and planning ministries was expected on Monday on the development ceiling.
The planning minister and his team, the official said, had given a detailed briefing to the prime minister last week about the development priorities of strategic nature for the next year, including the aspirations of the coalition partners.
On the other hand, the finance ministry would be explaining in its budget strategy paper the fiscal and external account limitations, hampering any meaningful growth in revenues other than those driven organically because of 21pc anticipated inflation and 3.4-3.5pc GDP growth forecast for next year against a paltry 0.5-0.6pc economic output this year because of super floods, unfavourable global economic environment and contractionary policies at home.
The growth target for the current year was budgeted at 5pc, with 7.1pc growth coming from industry, 3.9pc contribution from agriculture and 5.1pc from services.
Based on the latest situation, the next year’s PSDP will be targeted at over Rs900bn, more than Rs1tr in subsidies, defence expenditures slightly higher than Rs1.7tr and a massive Rs7.65tr in debt servicing costs.
Thus, the federal fiscal deficit is projected close to 6.5pc of GDP (almost Rs7tr) while the overall consolidated fiscal deficit is expected to be brought down to about 5.2pc of GDP (higher than Rs5tr) with hopes of cash surplus from provinces being pitched at 1.3pc of GDP — up from less than 1pc budgeted for the current year. The primary budget surplus is targeted at 0.3pc of GDP against the current year’s of 0.2pc.
Published in Dawn, May 15th, 2023