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.

FASTFACTS

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


Google postpones Android 11 unveiling amid US protests

Updated 52 min 48 sec ago

Google postpones Android 11 unveiling amid US protests

  • ‘We are excited to tell you more about Android 11, but now is not the time to celebrate’

Alphabet’s Google on Saturday said it has postponed next week’s planned unveiling of the beta version of its latest Android 11 mobile operating system in light of protests and unrest in the United States.
“We are excited to tell you more about Android 11, but now is not the time to celebrate,” Google said in a message posted on its Android developers website.
The event was originally scheduled to take place virtually on Wednesday, according to the website. In a tweet, it said that it will announce more details on the new version of Android “soon,” without specifying any dates.
Protests have spread across the United States over the killing of George Floyd, a Minneapolis black man who died after being pinned by the neck under a white police officer’s knee.