The GDP growth rate in the upcoming budget was reset at 5 percent, up from 4.2 percent previously approved by the Federal Cabinet on April 13. Likewise, inflation rate projections have also been revised to 8.2 percent instead of 8 percent.
These revisions were informed by a government team to a parliamentary panel, reported a local media outlet.
The overall budget deficit limit has been changed from 6 percent of GDP before to 6.3 percent of GDP now, while the primary deficit is expected to clock in much higher at 0.6 percent instead of 0.1 percent.
These revised projections have come along with an apparent understanding with the International Monetary Fund (IMF), the newspaper report added. An understanding has been reportedly reached between the government of Pakistan and the IMF for a controlled expansionary stance.
The alterations have followed the changes made in the economic team in Pakistan and encouraging macroeconomic indicators being seen this year.
Public Sector Development Program (PSDP) has also been increased from Rs. 800 billion last year to Rs. 900 billion in the upcoming budget. A revised medium-term Budget Strategy Paper (BSP) was presented in the National Assembly’s Standing Committee on Finance and Revenue informing of this revision.
The BSP was presented by a team of the Ministry of Finance and Federal Board of Revenue (FBR) led by Special Assistant to the Prime Minister (SAPM) on Finance and Revenue, Dr. Waqar Masood.
However, the lawmakers called these projections into question, saying that the numbers and arguments may be unrealistic, similar to how the projections in the past showed targeted inflation at 6.5 percent and budget deficit at 7 percent, but the actual economic statistics turned out to be 9 percent inflation and 7.2 percent budget deficit.
In response to this, Dr. Waqar said that since the April 13 approval of the BSP by the cabinet, some statistics had been observed that suggest beginning in the growth process and show sustainability. He mentioned the GDP growth rate of 3.94 percent, adding that expansion was one of the priorities of the government while remaining within the framework of the IMF program.
The SAPM said that the IMF had also agreed in principle to cooperate on the growth and expansion objectives as long as the policy of austerity continues. Therefore, the upcoming budget will focus on revenue mobilization along with austerity to keep expenditure minimal.
The tax measures will also be designed in a way that they do not impact the general price, he added.
The NA committee was also informed that out of Rs. 1.2 trillion COVID-19 funds, about Rs. 350 billion was still unspent, and about Rs. 200 billion of this amount will also be spent next year.
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