Pakistan’s Finance Minister Muhammad Aurangzeb will present the federal budget for the fiscal year 2024–25 on June 12, 2024, in the National Assembly. The budget, critical for securing a new International Monetary Fund (IMF) loan program, focuses on fiscal consolidation and revenue expansion. The government aims to address an estimated Rs800 billion revenue shortfall through expenditure cuts and revised tax policies.
Why is the FY2024–25 Budget Critical?
The federal budget serves as the primary mechanism for the Pakistani government to meet stringent IMF conditions required for a long-term bailout. According to official government records, the administration must demonstrate fiscal discipline to stabilize the economy. Finance Minister Aurangzeb faces the challenge of balancing a record Rs4.7 trillion national development program with the necessity of reducing the country’s primary deficit.
The National Economic Council (NEC), chaired by Prime Minister Shehbaz Sharif, finalized the development plans after resolving disputes with provincial governments. These negotiations centered on the distribution of the federal divisible pool under the National Finance Commission (NFC) award.
How Will the Government Manage Revenue?
To bridge the revenue gap, the government is implementing a dual strategy of expenditure reduction and tax base expansion.
- Expenditure Cuts: The ruling coalition has reached a framework agreement to trim development spending across all tiers of government.
- Taxation: The Federal Board of Revenue (FBR) is tasked with bringing the informal economy into the tax net. The Fixed Tax Asaan Scheme targets small traders and shopkeepers with annual turnovers up to Rs200 million.
- Provincial Shares: Under the latest consensus, provincial shares from the federal divisible pool will remain frozen at current levels. Any surplus revenue generated by the FBR above current projections will be retained by the federal government to meet "strategic needs."
What Are the Key Components of the Development Program?
The government has allocated Rs4.715 trillion for the national development portfolio. This figure represents a shift in priorities under IMF oversight:
- Provincial ADPs: Rs3.138 trillion, marking a 9.6% increase.
- Federal PSDP: Rs1.126 trillion, an increase of 12.6%.
- State-Owned Enterprises (SOEs): Rs451 billion, reflecting a 27% rise from the previous fiscal year.
Analysts note that while the PSDP includes funding for national highways and coalition-partner projects, the allocations for several other sectors have been trimmed to satisfy the IMF’s fiscal space requirements.
Are There Changes for Overseas Pakistanis?
Financial industry sources suggest the government is reviewing the current remittance cap. Overseas Pakistanis have reported difficulties in protecting liquid assets and investments abroad due to existing regulations. Adjusting this policy is viewed as a potential move to encourage higher formal inflows of foreign currency, which remains a priority for the State Bank of Pakistan.
Fact Sheet: FY2024–25 Budget Overview
| Category | Allocation/Target |
|---|---|
| Total National Development Portfolio | Rs4.715 Trillion |
| Federal PSDP | Rs1.126 Trillion |
| Provincial ADPs | Rs3.138 Trillion |
| Projected Revenue Shortfall | ~Rs800 Billion |
The government’s success in passing this budget will likely determine the speed at which Pakistan can finalize its next IMF program. The Pakistan Economic Survey for the outgoing fiscal year is scheduled for release on June 13, 2024, providing the final data points on the country’s economic performance before the budget debate begins in Parliament.
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