Wednesday , 18 April 2018
Home / News / Govt aims for large hike in current expenditures in its last budget – Newspaper

Govt aims for large hike in current expenditures in its last budget – Newspaper

loading...


ISLAMABAD: The Federal Cabinet on Tuesday approved Budget Strategy Paper (BSP) for next fiscal year envisaging Rs1.1 trillion for defence, Rs1.6tr for debt servicing and 5.3pc fiscal deficit in the absence of any foreign aid for budgetary support.

Presided over by Prime Minister Shahid Khaqan Abbasi, the meeting also approved revised estimates for current fiscal year because of some key slippages on the expenditure side including 5.5pc fiscal deficit for the current year, instead of 4.1pc target. This was despite a Rs251bn cut in the development programme of the federal government and Rs100bn cuts in provincial development plans.

Informed sources told Dawn that the BSP presented by secretary finance to the cabinet estimated the next year expenditure at Rs5.237tr compared to Rs4.753tr expenditure estimated for the current year.

Development spending to be cut, focus on salaries, defence, subsidies and debt service in 2018-19

Prime Minister’s Adviser on Finance Dr Miftah Ismail, however, told journalists that next year’s budget outlay would be around Rs5.5tr. The estimates would be finalised on Monday next.

The BSP put the defence allocation for next year at Rs1.1tr compared to Rs920bn for the current year. The cabinet also approved revised estimate for defence with a Rs80bn expenditure overrun.

The meeting was informed that an amount of Rs36bn was being proposed for up to 15pc increase in salaries and pensions for the next year but a final decision would be made on the budget day. As such, an amount of Rs342bn was proposed for pensions next year compared to Rs248bn budgetary allocation for the current fiscal year.

The cabinet was informed that pensions overshoot target by a wide margin and hence the allocation was revised to about Rs320bn and approved by the cabinet. The provinces would get about Rs2.55tr next year compared to Rs2.38tr allocation for this year.

The estimates for running expenditures for next year were put at Rs445 billion compared to Rs377bn allocation for current year. The target for subsidies was set at Rs179bn for next year compared to Rs144bn allocated for the current year. The cabinet also approved a Rs20bn revision on this head, putting subsidy related expenditure at Rs164bn for the current year.

Debt servicing estimate for the next year was put at Rs1.607tr. Total availability of resources through FBR taxation was estimated at Rs4.435tr next year compared to Rs4.103tr during current year that was missed by Rs80bn.

The Public Sector Development Programme (PSDP) for next year was estimated at Rs800bn compared to Rs1.001tr for current year. The allocation for current year was, nevertheless, cut by Rs251bn to Rs750 billion and approved by the cabinet.

The meeting was told that FBR was estimated to miss its revenue target for current year by about Rs80bn while another Rs222bn shortfall was also expected on the non-tax side. This means the Coalition Support Fund disbursements from the US are not expected during current or next year.

This was partly compensated through by cut in Rs251bn in federal and Rs100bn from provincial development budgets – almost 1pc of GDP – otherwise the deficit would have been 6.5pc for current year. The source said an additional allocation of Rs11bn has been made for general elections.

An amount of Rs75bn expenditure overrun was caused in interest payment only because of currency devaluation during current year. The cabinet was informed that macroeconomic framework for the next year envisaging 6.2pc growth rate supported by 3.8pc expansion in agriculture, 7.6pc in industry and 6.5pc in services sector.

The target for rate of inflation was set at 6pc for next year compared to 4pc of this year. Total investments for next year were targeted at 17.2pc of GDP compared to 16.4pc of current year while national savings are estimated to increase to 13.3pc next year from current year’s 12.1pc of GDP.

Exports are projected to go up to $27.3bn compared to $24.5bn of current year while imports would increase to $56.5bn from $53.1bn this year. That would mean the trade deficit increasing to $29.2bn against $28.6bn this year.
The current account deficit, on the other hand, is projected to come down to $12.5bn (3.8pc of GDP) next year from $13.7bn (4.4pc of GDP) this year.

An official statement said the cabinet was informed that the BSP for 2018-19 to 2020-21 was based on four broad targets including sustaining growth momentum, ensuring fiscal consolidation, managing balance of payments and ensuring debt sustainability.

It was informed that the recently announced Economic Reforms Package including lowering tax rates, widening tax base, real estate reforms, local amnesty and tightening of foreign exchange regime, will help increase revenues and reduce deficit.

The prime minister emphasised that sustained income and revenue streams will benefit the country instead of obtaining loans. The BSP was discussed at length and several members provided useful suggestions for incorporation in the upcoming budget proposals.

The cabinet approved BSP for 2018-19 to 2020-21.

Published in Dawn, April 18th, 2018

Source Link: Govt aims for large hike in current expenditures in its last budget – Newspaper

Check Also

Former US first lady Barbara Bush dead at 92: family

loading... WASHINGTON: Former US first lady Barbara Bush died Tuesday at the age of 92, …

Leave a Reply

Your email address will not be published. Required fields are marked *