Budget in Brief

FEDERAL BUDGET 202 2 -2 3

BUDGET IN BRIEF

Government of Pakistan Finance Division Islamabad

PREFACE

Budget in Brief is a synopsis of the Federal budget 2022-23. It provides aggregated information on revenue receipts, capital receipts, external receipts, current expenditure and development expenditure of the federal government for fiscal year 2022-23. Detailed information is available in the relevant budget documents i.e. Annual Budget Statement, Explanatory Memorandum on Federal Receipts and Demands for Grants and Appropriations which are uploaded on the website of Finance Division www.finance.gov.pk after presentation of annual budget in the National Assembly.

This document contains the concise overview of key priorities of the federal government, main objectives of the budget for the financial year 2022-23. This document offers a view of federal budgetary position for the financial year 2022-23 as well as budget estimates and revised estimates for current financial year.

'Budget at a Glance' 2022-23 offers a quick and simple overview of federal budget for 2022-23. A table showing working of fiscal deficit and financing of deficit 2022-23 is also added.

Some additional information regarding tax wise and province wise share in federal taxes, details of subsidies and grants, current loans and investments and details of Public Sector Development Program in respect of Ministries/Divisions/Departments and Corporations and Special Packages has also been shown.

I hope that this document will be beneficial and helpful for all those who seek a clear understanding of budget 2022-23.

Finance Division Islamabad, the 10^th June, 2022 Hamed Yaqoob Sheikh Secretary to Government of Pakistan

CONTENTS

CONTENTS

PART - I

Key Priorities of the Federal Government for FY 2022-23

Following are the Key Priorities of the Federal Government:

• a) To rejuvenate the Development Programmes

• b) To eliminate the power outages

• c) To boost agricultural productivity for food security

• d) To reduce fiscal deficit to restore fiscal sustainability

• e) To increase in agriculture and industrial productivity

• To ban on imports of luxury items to save the foreign exchange

• f)

• g) To minimize the losses of Public Sector Enterprises

• h) To enhance the Tax rate on wealthy people of the country

• i) Fine tuning of taxes on stronger shoulders to provide relief to the needy

The Budget Strategy for FY 2022-23

The Budget 2022-23 is a sustainable growth budget. It is based on a well thought out strategy to boost the economic growth earlier outlined in the Medium Term Budgetary Strategy Paper for FY 2022-23 to FY 2024-25, which gave a clear roadmap of the strategic priorities, revenue and spending policies of the Government. The main strategies of the Federal Government for FY 2022-23 are:

• 1. To stablize in economic growth
• 2. To control the increasing inflation
• 3. To increase Revenues
• 4. To enhance Exports
• 5. To protect the vulnerable segments of society through relief measures and pro-poor initiatives
• 6. To provide maximum relief to improve the socio-economic condition of poors
• 7. To stop tax leakages

Main Objectives of Budget 2022-23

• a) Control on the fiscal deficit and to promote sustainable growth of economy

• b) Maintaining primary balance at a sustainable level

• c) Protection of social spending to support the poors of the society

• d) Mobilization of resources by widening tax net

• e) Enhancement in Non-Tax Revenue through cost recovery and rationalizing varoius fees/levies

• f) Increase argicultural productivity

• g) Promotion of exportable industrial productions

• h) Continuation of sucessful IMF programme

• i) Maintain a level of Development Budget to boost the economy of country

• j) Funding of special areas of the country to ensure their development

• k) Control of non productive expenditure through austerity measures

• l) Target subsidy to the deserving segments of the society

• m) Keep the expenditure within the approved budget allocation

• n) Control the prices of daily useable items through increase in supply of such items

PART - II

Table - 1

Budget 2022-23 at a Glance

Table-1 presents position of overall Resources and Expenditure for the FY 2022-23.

Table - 2

Fiscal Deficit & Financing of Budget 2022-23

Table-2 shows Fiscal Deficit and Financing for FY 2022-23.

Table - 3

BE & RE of FY 2021-22 and BE of FY 2022-23 Table-3 presents important percentages of Budget & Revised Estimates of FY 2021-22 and Budget Estimates of FY 2022-23.

PART - III

COMPARISON OF BUDGET ESTIMATES FY 2021-22 - FY 2022-23

TABLE - 4

TAX RECEIPTS

Table-4 provides details of total Tax Revenues as given in Table-1, Part-II.

(Rs in Million)

TABLE - 5

NON TAX REVENUE RECEIPTS

Table-5 provides details of Non Tax Revenues as given in Table-1, Part-II.

(Rsin Million)

Contd…..

(Rs in Million)

TABLE - 6

DETAILS OF DIVISIBLE POOL TAXES

Table-6 provides details of Divisible Pool Taxes that are transferred to provinces as per NFC Award and straight transfers to provinces.

TABLE - 7 CAPITAL RECEIPTS (NET)

Table-7 explains Capital Receipts (Net) and their sources. It comprises of Net Lending of PSEs, (Table-1) which is the difference between disbursement minus recovery of loans by PSEs (Others).

The second part shown at Sr. No.II of this table relates to the Non Bank Borrowing as indicated at Sr. No.II of Table-1 of Part-II.

(Rs in Million)

TABLE - 8 PUBLIC ACCOUNT (NET)

Table-8 indicates the position of Public Account (Net):

(Rs in Million)

TABLE - 9

EXTERNAL RESOURCES

Table-9 contains receipts from External Resources. Net External Receipts shows details of inflow minus repayments. The details of Net External Receipts is indicated in Table-23 of Part-IV.

(Rs in Million)

TABLE - 10 CURRENT EXPENDITURE

Table-10 contains Current Expenditure, already given at A in Table-1, PartII, in summarized form.

(Rs in Million)

(Rs in Million)

TABLE - 11

FUNCTION-WISE EXPENDITURE

Table-11 contains function wise expenditure, i.e. how much is utilized for various functions of the Government.

(Rs in Million)

TABLE - 12

SUBSIDIES

Table-12 gives the details of subsidies for which a single figure is given in Table-1, Part-II.

(Rsin Million)

TABLE - 13 GRANTS AND TRANSFERS

Table-13 gives the details of Grants and Transfers, for which a single figure is given in Table-1, Part-II.

(Rsin Million)

Contd….

(Rs in Million)

• Funds will be opened in Public Account of Federation.

TABLE - 14

CURRENT LOANS & ADVANCES

Table-14 explains the Current Loans and Advances to various PSEs, States and Friendly Countries.

TABLE - 15 CURRENT INVESTMENTS

Table-15 explains Current Investments through equity, etc. in various entities.

TABLE - 16

DEVELOPMENT LOANS AND ADVANCES

Table-16 explains Domestic and External Development Loans and Advances.

Development Loans and Advances are part of project aid disbursed by foreign donors and are used to Finance PSDP. The loans are re-lent by the Federal Government to Provincial Governments and PSEs.

(Rsin Million)

TABLE - 17 DISTRIBUTION OF PSDP

The Table-17 explains the Division wise distribution of PSDP, explaining the figures of PSDP given in Table-1, Part-I.

Contd…..

(Rs in Million)

PART - IV

DETAILED BUDGET ESTIMATES Budget Estimates 2021-22 Revised Estimates 2021-22 Budget Estimates 2022-23

TABLE - 18

REVENUE RECEIPTS

Table-18 presents the detail of Revenues collected by FBR, Summary already given in Table-4 (Part-II):

(Rs in Million)

TABLE - 19

NON TAX REVENUE RECEIPTS

Table-19 shows the Non Tax Revenues details realized by the other government functionaries.

(Rs in Million)

Distribution of Resources Among Federation and Provinces

1. Pakistan is a Federal democracy. In order to maintain inter-governmental fiscal relationship, Article 160 of the Constitution provides for setting up of a National Finance Commission (NFC) with intervals not exceeding five years. The mandate of NFC is to make recommendations to the President for the distribution of resources between the Federal and Provincial Governments. The recommendations of the NFC are given legal cover through a President's Order No. 5 of 2010. The relevant provisions of President's Order No. 5 of 2010 as amended vide No. 6 of 2015 are as under:

(i) Distribution of Revenues.- (1) The divisible pool taxes in each year shall consist of the following taxes levied and collected by the Federal Government in that year, namely:─

• (a) taxes on income;

• (b) wealth tax;

• (c) capital value tax;

• (d) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed;

• (e) export duties on cotton;

• (f) customs duties;

• (g) federal excise duties excluding the excise duty on gas charged at well-head; and

• (h) any other tax which may be levied by the Federal Government.

(2) One percent of the net proceeds of divisible pool taxes shall be assigned to Government of Khyber Pakhtunkhwa to meet the expenses on war on terror.

(3) After deducting the amounts as prescribed in clause (2), of the balance amount of the net proceeds of divisible pool taxes, fifty-six percent shall be assigned to provinces during the financial year 2010-11 and fifty-seven and half percent from the financial year 2011-12 onwards. The share of the Federal Government in the net proceeds of divisible pool shall be forty-four percent during the financial year 2010-11 and forty-two and half percent from the financial year 2011-12 onwards.

(ii) Allocation of shares to the Provincial Governments.- (1) The Province-wise ratios given in clause (2) are based on multiple indicators. The indicators and their respective weights as agreed upon are:-

(2) The sum assigned to the Provincial Governments under Article 3 shall be

distributed amongst the Provinces on the basis of the percentage specified against each:─

(3) The Federal Government shall guarantee that Balochistan province shall receive the projected sum of eighty-three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first year of the Award. Any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement for Balochistan shall remain protected throughout the remaining four years of the Award based on annual budgetary projections.

(iii) Payment of net proceeds of royalty on crude oil. ─Each of the provinces shall be paid in each financial year as a share in the net proceeds of the total royalties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Province in that year bears to the total production of crude oil.

(iv) Payment of net proceeds of development surcharge on natural gas to the Provinces.─ (1) Each of the Provinces shall be paid in each financial year as a share in the net proceeds to be worked out based on average rate per MMBTU of the respective province. The average rate per MMBTU shall be derived by notionally clubbing both the royalty on natural gas and development surcharge on Gas. Royalty on natural gas shall be distributed in accordance with clause (1) of Article 161 of the Constitution whereas the development surcharge on natural gas would be distributed by making adjustments based on this average rate.

(2) The development surcharge on natural gas for Balochistan with effect from 1st July 2002, shall be re-worked out hypothetically on the basis of the formula given in clause (1) and the amount, subject to maximum of ten billion rupees, shall be paid in five years in five equal installments by the Federal Government as grants to be charged on the Federal Consolidated Fund.

(v) Grants-in-Aid to the Provinces.- There shall be charged upon the Federal Consolidated Fund each year, as grants-in-aid of the revenues of the province of Sindh an amount equivalent to 0.66% of the provincial share in the net proceeds of divisible pool as a compensation for the losses on account of abolition of octroi and zilla tax.

(vi) Sales tax on services.- NFC recognizes that sales tax on services is a Provincial subject under the Constitution of the Islamic Republic of Pakistan, and may be collected by respective Provinces, if they so desired.

(vii) The President has constituted 10th NFC on 21st July, 2020 for consideration on distribution of resources afresh.

Detail of Provincial share of Federal Taxes for budget estimates and revised estimates of 2021-22 and budget estimates of 2022-23 are given below:-

TABLE - 20

DETAILS OF DIVISIBLE POOL TAXES (TRANSFERS TO PROVINCES)

(Rs in Million)

TABLE - 21 CAPITAL RECEIPTS (NET)

Table-21 indicates the position of Capital Receipts (Net):

(Rs in Million)

TABLE - 22 PUBLIC ACCOUNT (NET)

Table-22 indicates the position of Public Account (Net):

(Rs in Million)

TABLE - 23

EXTERNAL RESOURCES

Table-23 indicates the position of External Resources as below:

(Rs in Million)

(Rs in Million)

TABLE - 24

CURRENT EXPENDITURE

Table-24 presents the position of Current Expenditure.

RE 2021-22 and BE 2022-23 including Provincial and Federal Net Lending (after disbursment (-) recoveries)

TABLE - 25

FUNCTION WISE CURRENT EXPENDITURE

Table-25 shows details of Current expenditure which is divided into Ten (10) functional items as per Charts of Accounts.

The detail of Expenditure under above Ten Functions (10 Tables) are as under:-

(1) GENERAL PUBLIC SERVICE

(Rs in Million)

(Rsin Million)

(2) DEFENCE AFFAIRS AND SERVICES

(Rs in Million)

(3) PUBLIC ORDER AND SAFETY AFFAIRS

(Rsin Million)

(4) ECONOMIC AFFAIRS

(Rsin Million)

(Rsin Million)

(Rsin Million)

(7) HEALTH AFFAIRS AND SERVICES

(Rsin Million)

(8) RECREATION, CULTURE AND RELIGION

(9) EDUCATION AFFAIRS AND SERVICES

(10) SOCIAL PROTECTION

(Rsin Million)

In addition to the above allocations under the Current Budget as per ten classification heads, the Federal Govts provides funds for various purposes.

In order to alleviate the impact of inflation on citizens, especially the poor segments of society, the Federal Government spends a fairly large sum on providing power and food subsidies.

TABLE - 26

SUBSIDIES

Table-26 shows detail of subsidies:

(Rsin Million)

• Allocation of Rs.35 billion for PHL Loan as Equity for FY 2022-23 is shown in Table-29 "Current Investment" and included in Net Lendaing as shown in Table-1.

Contd…..

(Rsin Million)

TABLE - 27

GRANTS AND TRANSFERS

Table - 27 gives details of Grants and Transfer to provinces and other entities as provided by the Federal Government.

Contd…..

(Rsin Million)

(Rsin Million)

Contd…

(Rs in Million)

• Funds will be opened in Public Account of Federation.

TABLE - 28 CURRENT LOANS & ADVANCES

Table - 28 shows Current Loans & Advances as provided by Federal Government to Govts. of AJK, GB and various institutions as well as Govt. Servants to enable them to meet their financial requirements. The details are as under:

(Rsin Million)

Contd…

TABLE - 29 CURRENT INVESTMENTS

Table-29 shows detail of Current Investments. The Federal Government invests funds in various Companies, Banks etc, to earn Dividends which results an increase in Government's Revenues:

Contd…

(Rsin Million)

TABLE - 30

DEVELOPMENT LOANS AND ADVANCES

Table-30 shows Development Loans and Adcances as made by Federal Government to Provinces, AJK & GB, PSEs, Financial / Non-Financial Institutions, District Governments / TMAs and others to assist them in carrying out their Development Programmes:

(Rsin Million)

Public Sector Development Programme (PSDP)

The Public Sector Development Programme (PSDP) is the main instrument for improving the socio-economic conditions in the country and achieving the macroeconomic & development objectives and targets set by the government, which yield maximum benefits for the society in the shortest possible time.

TABLE - 31 PSDP 2022-23

Table - 31 shows the details of PSDP size for FY 2022-23 in respect of Ministries / Divisions / Departments / Corporations and for Special Packeges / Relief are given below:-

Contd….

(Rsin Million)