ISLAMABAD (DNA) – The National Assembly on Friday approved the Budget for Fiscal Year 2019-20 after more than two weeks since it was presented by the Pakistan Tehreek-e-Insaf government on June 11 with a total outlay of Rs7.02 trillion.On June 11, Minister of State for Revenue Hammad Azhar has unveiled the first budget for fiscal year 2019-20 of the Pakistan Tehreek-e-Insaf (PTI)-led federal government with an outlay of Rs7.02 trillion, in the National Assembly (NA) in Islamabad.
The austerity-oriented budget, approved by the cabinet, has proposed a 10 per cent cut in ministers salaries and a subsidy worth 40 billion Pakistani rupees (US $2.6 million) on gas and electricity. However, the salaries of government employees and the pension of retired ones will get a 10 percent hike.
Azhar, while presenting the budget, said that Pakistan s trade deficit has been reduced by US $4 billion and now stands at US $22 billion. The minister said that the governemnt has a brought a new thought, new commitment and new approach to governance. He said it is time to lift the people who have been left behind and recalled the economic situation the government has faced since coming into power.
Hammad Azhar said: “Pakistan s total debt has reach Rs31 trillion. We are deeply indebted thanks to high-interest loans. Foreign exchange reserves had dropped below $10 billion. The current account deficit had reached a historic peak of $20bn, while the trade deficit had reached $32bn. The fiscal deficit was more than Rs2.26tr.”
He said: “US$7 billion reduction in Current Account Deficit will be achieved this year, which will be 6.5 billion dollars next year.”
The minister said current account deficit will be reduced to 6.5pc in FY19-20 and exports will be boosted through a revised duty structure. “Power and gas will be cheapened and Free Trade Agreements will be re-evaluated,” he said and added Pakistan will be made a part of the international value chain.
Azhad said we borrowed a total of $9.2 billion from China, Kingdom of Saudi Arabia, and the United Arab Emirates, adding that the government empowered State Bank of Pakistan (SBP).
“A total of 11 per cent tax to GDP ratio currently, was the lowest in the region,” he said and added there were only 50 percent of SECP registered companies paying tax. “We will have to change this culture.”
The minister said that circular debt was reduced by Rs12 billion per month and it was brought down to 26 billion rupees from 38 billion rupees.
Given the current economic situation, Hammad Azhar said the government has acted with responsibility and taken steps for the economic stabilization, adding that we have increased import duty which helped us bring down imports from US$49 billion to US$45 billion.
The outlay of the budget for Fiscal Year 2019-20 is Rs7.02 trillion which is 30 percent higher than the previous budget with targeted tax revenues of Rs5.55 trillion which will be 12.6 percent of the Gross Domestic Production (GDP).
“A challenging target of Rs5,555 billion FBR revenue collection will be combined with aggressive expenditure controls to reduce primary deficit to 0.6% of GDP. Both the civil and military governments have announced unprecedented reduction in expenditures”, he said.
Cold Drinks, Sugar, Oil, Jewellery Rates Increased
In order to discourage the consumption of sugary drinks, federal excise duty has been proposed to be 14 percent from existing 11.25 percent. It has also been recommended that the Federal Excise Duty on cooking oil/ghee be increased to 17 percent.
Sugar prices are likely to go up as it has been recommended that the sales tax, which previously stood at 8.5 percent, now be increased to 17 percent.
Sales Tax on Chicken, Mutton and Fish
A total of 17 percent sales tax on marble industry has also been in the federal budget, while 17 percent sales tax has also been proposed for cooked chicken, mutton and beef and fish.
The PTI government has also increased minimum wage to Rs17500. The conveyance of disabled persons has been increased to Rs2000 from Rs1000 while special allowance of private secretaries attached with ministers and parliamentary secretaries has been enhanced to 25 percent.
The Minister of State announced ten per cent ad-hoc relief for the government employees from one to sixteen scales and all personnel of the defence forces.
Five percent increase has been announced for public sector employees of 17 to 20 grades, while no increase has been made in the salaries of the government employees of 21 and 22 grades.