Pakistan unveils $54bn budget amid opposition protests

Pakistan’s finance adviser, Abdul Hafeez Sheikh said President Imran Khan has committed to permanently correcting economic imbalances. (AFP)
Updated 12 June 2019

Pakistan unveils $54bn budget amid opposition protests

  • Pakistan has struggled for decades to collect taxes
  • Only around one percent of the 200-million strong population filed a return in 2018, according to estimates

KARACHI: Pakistan’s government on Tuesday presented its federal budget for the next fiscal year, with a total outlay of 8.2 trillion rupees ($54 billion) — 38.9 percent higher than the size of the budget for this year.

Hammad Azhar, the country’s minister for revenue, proposed the budgetary measures for the upcoming year amid protests from opposition parties.

Pakistan’s total debt had reached 31 trillion rupees due to high-interest loans taken out by the previous government. Foreign exchange reserves had dropped below $10 billion and the current account deficit had reached $20 billion with the trade deficit at a staggering $32 billion, Azhar said.

He also outlined government measures to sustain the economy. “We have reduced trade deficit, while remittances saw an increase of $2 billion. The current account deficit dropped by $4 billion,” Azhar said.

Pakistan has allocated 1.86 trillion rupees for public sector development projects. Tax collection targets have been set at 5.55 trillion rupees, 12.6 percent of the tax to gross domestic product (GDP) ratio, while tax revenue targets have been set at 5.8 billion rupees.

The federal government will transfer 3.25 trillion rupees to the country’s four provinces under the National Finance Commission. The fund transfer reflects a 32 percent increase compared with the last fiscal year.


Government spending has been reduced from 460 billion rupees to 437 billion, said Azhar, adding that the defense budget would remain the same as last year at 1.15 billion rupees. “There will be no compromise on the efficiency of the armed forces,” he said.

The minimum wage has been set at 17,500 rupees, the minister added, announcing a 10 percent cut in the salaries of members of the Cabinet and federal ministers.

With corporate tax fixed at 29 percent for the next two years, Azhar announced that the minimum taxable income would be reduced to 600,000 rupees per annum — the previous government had increased it to 1.2 million per annum.

Meanwhile, over 40 billion rupees in subsidies are to be handed out for electricity and gas, resulting in a 12 billion rupees monthly decrease in circular debt in the energy sector.

“Financial mismanagement resulted in a 2.26 billion rupees deficit, and the circular debt in the energy sector reached 1.2 billion,” Azhar said.

General sales tax remains unchanged at 17 percent, with an increased duty on luxury items. Sales taxes on sugar, fish, meat, and chicken have been increased to 17 percent.

The duties on liquefied natural gas were reduced from 7 percent to 5 percent.

The minister proposed to allocate 20 billion rupees and 15 billion rupees for the Diamer-Bhasha and Mohmand dams, to cater to Pakistan’s growing water scarcity.

The government has formed a new ministry to eliminate poverty, which will introduce programs for social safety. People who will benefit from the “Ehsaas” program include the poor, orphaned, homeless and disabled. It also announced a ration card scheme, whereby 80,000 people will benefit from interest-free loans, while 60,000 women will be given access to mobile phones.

Pakistan’s economy grew by 3.3 percent this fiscal year, its lowest in nine years, compared with 5.5 percent the previous year and a six-year average GDP growth of 4.5 percent, according to the Economic Survey of Pakistan issued on Monday.


3.3% - Growth in Pakistan’s economy this fiscal year.

German energy giant RWE vows action against climate activists

Updated 2 min 53 sec ago

German energy giant RWE vows action against climate activists

  • A thousand activists invaded the vast Garzweiler lignite mine
  • RWE say that having given “many warnings” about trespassing

BERLIN: German energy giant RWE said Sunday it will be seeking prosecutions after hundreds of climate activists occupied their open-cast mine at the weekend to protest against the use of coal.

Following a cat-and-mouse game with police on Saturday, around a thousand activists invaded the vast Garzweiler lignite mine, some 43 km west of Cologne.

Police say it took until Sunday morning to completely clear the area of protesters, who RWE accuse of trespassing and arson.

Around eight officers were injured during the protests, according to police, but no figures were given on how many protesters were taken into custody.

The action was part of a series of protests as Garzweiler, which covers 48 square km, supplies lignite, or brown coal, to power stations in the region.

“The group has no sympathy for the 1,300 ‘activists’ who illegally entered the Garzweiler opencast mine and occupied the tracks on the coal supply lines,” said RWE in a statement.

“In addition, there were several arson attacks on a pump station, switch cabinets and vehicles.”

The “Ende Gelaende” (EG) protesters want to shut down RWE’s operations and end Germany’s use of climate-damaging coal-fired power stations long before the government’s cut-off target of 2038.

The German phrase “Ende Gelaende” means that something is irrevocably finished — similar to “end of story” — which is how the protesters feel about the fossil fuel age.

Many of those who took part in the occupation were school pupils and students who were part of the “Fridays for Future” demonstrations the day before.

Between 20,000 and 40,000 young activists from 17 countries flocked to Aachen near the Dutch and Belgian borders Friday for a huge show of force of the school-strike movement launched by Swedish teenage activist Greta Thunberg.

According to EG organizers, about 8000 people also took part in a rally in the small town of Keyenberg, near the Garzweiler mine, on Saturday.

Hundreds of climate protesters then entered the vast mine, bringing excavation to a standstill.

RWE say that having given “many warnings” about trespassing, they will be taking action “against all criminal offenses in connection with any occupations and blockades that have taken place.”

On Friday, 500 activists managed to cut off the supply of coal to the nearby Neurath plant, one of Germany’s main coal-fired power stations, by sitting down on the rail tracks the supply trains use.

Police said the tracks between the Neurath and Niederaussem power plants were still blocked on Sunday morning.

RWE said that despite “enormous disruption,” the “operation of the power plants and electricity generation were never at risk.”

However, “the company has suffered an economic loss, which is currently being determined.”

RWE insists it is “fully committed to climate protection targets” and says that between 2012 and 2018, the company reduced CO2 emissions by “60 million tons or 34 percent.”

“There is a plan on the table for phasing-out coal and there is no reason to endanger people and carry out illegal actions,” says Frank Weigand, CEO of RWE Power.

“We naturally respect the right to freedom of expression and peaceful protests such as ‘Fridays for Future’.

“But it is not acceptable to deliberately break the law under the guise of climate protection.

“Blocking tracks and entering opencast mines is dangerous and against the law.”