Annual Budget Statement

FEDERAL BUDGET 2024-25 ANNUAL BUDGET STATEMENT GOVERNMENT OF PAKISTAN FINANCE DIVISION ISLAMABAD

PREFACE

Article 80(1) of the Constitution of the Islamic Republic of Pakistan requires that the Federal Government shall, in respect of every financial year, cause to be laid before the National Assembly a statement of estimated receipts and expenditure of the Federal Government for that year, referred to as the Annual Budget Statement. Article 80(2) obligates that the statement shall show separately the charged and other expenditures to be made from the Federal Consolidated Fund as well as distinguish expenditures on revenue account from other expenditures. The statement shall also be transmitted to the Senate as required under Article 73(1) of the Constitution. Section 4 of the Public Finance Management Act, 2019 states that the Annual Budget Statement shall include a statement of purpose, a statement of contingent liabilities of the Federal Government, and a statement of fiscal risks. Further, Section 8 of the Act requires that the Federal Government shall, in respect of every financial year, lay a statement of estimated tax expenditure before the National Assembly. These statements are accordingly included in the Annual Budget Statement.

Section 5 and 10 of the Fiscal Responsibility & Debt Limitation Act, 2005 require laying of a mediumterm budgetary statement and statements of responsibility before the National Assembly. These are also included in the Annual Budget Statement.

It is added that the Explanatory Memorandum of Federal Receipts and the Demands for Grants and Appropriations constitute the explanatory part of the Annual Budget Statement for FY2024-25.

IMDAD ULLAH BOSAL

Secretary to the Government of Pakistan

Finance Division Islamabad, the 12^th June, 2024

SUMMARY OF RECEIPTS

Federal receipts are categorized as Revenue Receipts, Capital Receipts, Public Account Receipts and External Receipts. All these receipts, except Public Account Receipts become part of the the Federal Consolidated Fund.

As per Section 22 of the Public Finance Management Act, 2019, the operation of the Federal Consolidated Fund and the Public Account of the Federation vests in the Finance Division.

(Rs in million)

REVENUE RECEIPTS

Revenue Receipts constitute major component of total Federal resources. Revenue Receipts may be categorized as Tax Revenue Receipts and Non-Tax Revenue receipts, which are largely derived from the following sources:-

Tax Revenue Receipts

Tax Revenue is administered by the Federal Board of Revenue (FBR), which comprises Customs Duty and Inland Revenue i.e Direct Taxes, Sales Tax and Federal Excise Duty. FBR taxes may also be categorized as Direct Taxes and Indirect Taxes. Direct Taxes comprise Income Tax, Capital Value Tax, WWF (Ordinary Collection) and Contribution under Compnies Profit (WPPF). Indirect Taxes include Sales Tax, Federal Excise Duty and Customs Duty. A snapshot of Budget Estimates is as under:-

Non-Tax Revenue Receipts

As per Section 2(a) of the Public Finance Management Act, 2019 (amended), Non-Tax Revenue means revenues received by the Government in terms of clause (1) of Article 78 of the Constitution and the recurring income of the Government from investments and provision of services but does not include those mentioned in clause (3) of Article 160 of the Constitution. Non-Tax Revenue of the federal government is administered by various Ministries / Divisions/ Departments. Budget Estimates are as under:-

CAPITAL RECEIPTS

Capital receipts comprise Recoveries of Loans and Advances from Provinces and other entities and Public Debt which includes Permanent Debt and Floating Debt. The net capital receipts so realized by the federal government generally constitute the available resources for the financing of its Public Sector Development Programme. Budget Estimates are as under:-

( Rs in million)

EXTERNAL RECEIPTS

External Resources comprise loans and grants received from multilateral, bilateral and other sources for approved projects, programmes and other initiatives. Budget Estimates are as under:-

(Rs in million)

PUBLIC ACCOUNT RECEIPTS

Article 78(1) of the Constitution of Islamic Republic of Pakistan provides that all revenues received by the Federal Government, all loans raised by that Government and all moneys received by it in repayment of loan, shall form part of the Federal Consolidated Fund. Article 78(2) provides that all other monies received by or on behalf of the Federal Government shall be credited into the Public Account of the Federation. Therefore, all the monies received by or on behalf of the Federal Government in terms of Article 78(2) are Public Account receipts which are not revenues in terms of Article 78(1) of the Constitution. However, such Public Account receipts cannot be operated without establishment of Special Purpose Funds, deposits, reserves etc under the authority of an act of the Parliament or with the approval of the Federal Government. Moreover, as per Section 32 of the Public Finance Management Act, 2019, special purpose funds, in which monies have been appropriated by the National Assembly shall be established under any law or with the approval of the Federal Government. There are two sources of Public Account Receipts as under:-

National Savings Schemes

National Savings Schemes include Savings bank accounts, Defence Savings Certificates, Special Savings Certificates, Pension Benefit Accounts, Behbood Savings Certificates etc.

Deposits and Reserves (Receipts)

Deposits and Reserves represent all monies forming part of the Public Account of the Federation as per Article 78(2) of the Constitution of Islamic Republic of Pakistan. Budget estimates of receipts in the following table are however subject to fulfillment of following stipulations:- (i) The funds appropriated by the National Assembly out of Federal Consolidated Funds in terms of Articles 80 to 84 of the Constitution for a particular financial year (being lapsable) shall be utilized as per Cash Management and TSA Rules 2020 and shall not be deposited under these deposits and reserves heads of account (being nonlapsable) under the Public Account.

(ii) The maintenance and operation of all these funds, deposits, reserves etc shall be subject to their due establishment either under the authority of an act of Parliament or with the approval of the Federal Government, as the case may be.

(iii) Revenues in terms of Article 78(1) of the Constitution shall not be deposited in these deposits and reserves heads of account under the Public Account. The revenues shall only be deposited in the respective heads of account of tax revenue and non tax revenue.

(iv) Receipt of funds into these deposits and reserves heads of account shall only be allowed by the Accounting Offices subject to compliance of the stipulations at (i) to (iii) above and to the extent of reconciled available balance under the respective head of account.

( Rs in million)

Contd…..

SUMMARY OF EXPENDITURE

(Current & Development)

In this table, the Budget Estimates of current expenditure (on revenue and capital account) and Budget Estimates of Development expenditure (on revenue and capital accounts) have been mentioned as per Article 80(2) of the Constitution of Pakistan.

(Rs in million)

Current Expenditure on Revenue Account

Current Expenditure on Revenue Account

Current Expenditure on Revenue Account

Revised Estimates 2023-24 are as of 24th May, 2024 based on SAP System

Current Expenditure on Capital Account

(Rs in million)

Development Expenditure on Revenue Account

(Rs in million)

Contd…..

DEVELOPMENT EXPENDITURE ON REVENUE ACCOUNT

Revised Estimates 2023-24 are as of 24th May, 2024 based on SAP System

DEVELOPMENT EXPENDITURE ON CAPITAL ACCOUNT

( Rs in Million)

CAPITAL EXPENDITURE

The expenditure incurred on repayment of domestic debt receipts is termed as Capital Expenditure.

(Rs in million)

PUBLIC ACCOUNT EXPENDITURE

National Savings Schemes

The expenditure incurred on repayment of National Savings Schemes is termed as Public Account Expenditure.

Contd…..

Deposits and Reserves

Deposits and Reserves represent all monies forming part of the Public Account of the Federation as per Article 78(2) of the Constitution of Islamic Republic of Pakistan. Budget estimates of Expenditure (withdrawal of funds) from the Deposits and Reserves as depicted in the following table are however subject to fulfillment of following stipulations:-

(i) The maintenance and operation of all these funds, deposits, reserves etc shall be subject to their due establishment either under the authority of an act of Parliament or with the approval of the Federal Government, as the case may be.

(ii) Withdrawal of funds from these deposits and reserves heads of account shall only be allowed by the Accounting Offices subject to compliance of the stipulations at (i) above and to the extent of reconciled available balance under the respective head of account.

(iii) There shall be no authority of directed access to Central Account No.1 (Non Food) in SBP.

(iv) Withdrawal of funds from these Deposits and Reserves head of accounts shall be in accordance with the provisions of Public Finance Management Act, 2019, Cash Management and Treasury Single Account Rules 2020 and the Special Assignment Account Procedure for the Public Account of the Federation 2021. Personal Ledger Accounts shall not be used for withdrawal of funds.

STATEMENT OF ESTIMATED CHARGED AND VOTED EXPENDITURE

In terms of Article 80(2) of the Constitution of Pakistan, this statement distinguishes charged and voted expenditure.

Statement of Purpose

This statement is being provided in compliance with section 4 of the Public Finance Management Act, 2019. Based on the policy priorities of the Federal Government, the “demands for grants” cater towards debt servicing of domestic and foreign loans and advances, for expenditures to be incurred on re-current and development activities to re-vitalize sustainable economic growth. Health, education, climate, gender and social sector development are key focused areas for the government.

The FederalGovernment is steadfast in its commitment to provide relief measures aimed at alleviating the burdens faced by the populace, especially those in the lowincome strata of society. Through targeted interventions such as social safety programs and subsidies on essential commodities, including food items and electricity, the government seeks to mitigate the adverse impacts of economic challenges on vulnerable segments of the population.Moreover, recognizing the imperative of stimulating economic activity and fostering employment opportunities, the government will extend support to Information Technology and industrial sector particularly the small medium enterprises. While, stimulating the economic growth through these interventions, government's focus is also to promote green economy.

Imdad Ullah Bosal Secretary to the Government of Pakistan

Finance Division

Islamabad, 12^th June, 2024

Demand-Wise Expenditure for Budget Estimates 2024-25

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STATEMENT OF OBJECT CLASSIFICATION WISE EXPENDITURE

Rs. In million

Government of Pakistan Finance Division (Debt Management Office)

Subject: STATEMENT OF CONTINGENT LIABILITIES OF THE FEDERAL GOVERNM ENT

Contingent liabilities of Pakistan are primarily guarantees issued on behalf of Public Sector Enterprises (PSEs). The sovereign guarantee is normally extended to improve financial viability of projects or activities undertaken by the government entities with significant social and economic benefits. It allows public sector companies to borrow money at lower costs or on more favourable terms and in some cases allows to fulfil the requirement where sovereign guarantee is aprecondition for concessional loans from bilateral/multilateral agencies to sub-sovereign borrowers. 2. The volume of new government guarantees issued during a financial year is limited under Fiscal Responsibility and Debt Limitation Act which stipulates that the government shall not give guarantees aggregating to an amount exceeding two percent of the GDP in any financial year including those for rupee lending, rate of return, outright purchase agreements and other claims and commitments provided the renewal of existing guarantees shall be considered as issuing a new guarantee. 3. During Jul-Mar FY24, the government remained within the FRDL Act limit for issuance of new/rollover of GoP Guarantees which stood at 0.1% of GDP.Total executed guarantees were Rs 3,685 billion while outstanding stock was Rs 3,505 billion at end March2024as per the following details:

Table-1: Summary of Outstanding Government Guarantees (All figures are Rs in billion unless otherwise stated)

4. Sector-Wise, Entity Wise and interest rate wise share of the guarantees at end March 2024are as follows:

Table 2: Outstanding Position of GoP Guarantees

Note: The original maturities of major portion of Guaranteed Debt Stock were 5 years and above

5. Presently, Guarantees issued against commodity operations are not included in the above table. These guarantees issued against the commodity financing operations undertaken by TCP, PASSCO, and provincial governments. The outstanding stock of commodity operations was Rs 1,133 billion at end March 2024.

6. The estimates of guarantees to be issued from April 2024 till June 2025 are as follows:

Table 3: Estimated Guarantees Issuance and Position (Q4 FY 24 and FY 25) (Rs in billion)

Note

(i) Expected external guarantees are converted intoPKR at exchange rate of 295/USD

(ii) The estimates are developed based on requests received so far from different PSEs and issuing wings during the ongoing Fiscal Year

(iii) The guarantees of which LoCs have already been issued before March 2024are incorporated in Opening Guaranteed Debt Position as at End March 2024

(Iv) The above table excludes Guaranteed Debt Position and expected guarantees for commodity operations.

STATEMENT OF FISCAL RISKS

1. Fiscal risks may lead to potential threats or uncertainty in fiscal forecasts presented in the Medium-Term Budgetary Statement, as defined in section 5 of the Fiscal Responsibility and Debt Limitation (FRDL) Act 2005.

2. Higher Interest Rate: Any increase in the interest rate on external and domestic debt can lead to a rise in federal expenditures and subsequently, the federal fiscal deficit and total debt of the government. If this possibility is realized, the overall effect will be substantial without additional measures.

3. Lower Non-Tax Revenue Collection: A significant reduction in non-tax revenue collections leads to a substantial decrease in net federal revenue and a consequent increase in fiscal deficit. Additionally, the higher deficits contribute to an increase in debt stock over the forecasted period.

4. Higher Subsidies: An increase in subsidies leads to an increase in expenditure, the effect on fiscal deficits and debt stock is relatively limited. Higher subsidies support the targeted sectors or programs but may also strain government finances if not accompanied by corresponding revenue measures or expenditure controls.

5. Combination of the first three Scenarios: This scenario demonstrates the most significant impact on fiscal variables across the board. The combination of reduced revenues, increased expenditure on subsidies, and potential financing needs due to higher interest rates leads to substantial fiscal deficit and higher debt stock. It underscores the interconnectedness of fiscal policy and the need for comprehensive approaches to address fiscal challenges.

6. Lower GDP Growth : This involves lowering the projected GDP growth rate by a quarter (in each fiscal year). While this scenario does not directly affect fiscal policy measures, it has implications for revenue generation and expenditure planning. The lower GDP growth rate leads to a decrease in net federal revenue due to subdued economic activity. Consequently, there is pressure on fiscal deficit and debt accumulation, as the government may need to maintain or increase expenditures to stimulate growth amid lower economic performance.

7. Exchange Rate Depreciation: More-than-expected depreciation of the Pakistani Rupee can significantly impact fiscal sustainability by increasing the cost of servicing external debt, as repayments and interest on foreign-denominated loans become more expensive in local currency terms. Additionally, a weaker rupee can lead to higher import costs, fueling inflation and putting pressure on public expenditure, particularly if subsidies on essential goods like fuel and food are in place. The combined effect of these factors can lead to a higher fiscal deficit and an increased debt burden, exacerbating fiscal vulnerabilities. Moreover, the depreciation could undermine investors’ confidence, leading to capital outflows and further currency depreciation, creating a vicious cycle of financial instability.

8. Climate change and natural disasters pose increasingly significant threats to global economic stability and fiscal sustainability. As these phenomena intensify, governments, worldwide, are compelled to reevaluate their fiscal strategies for managing the associated risks

effectively. Despite being an almost negligible contributor to global warming, the costs of climate change to Pakistan are substantial and continuously increasing as the country faces severe economic challenges. The accelerated impacts of climate change have added a new layer of pressure on the economy, including the exogenous shock of severe climate disasters, which in 2022 exerted significant losses on GDP. Rising inflation, high indebtedness, low growth, currency depreciation, and depleted foreign currency reserves have added to the scale and multitude of challenges.

8. Stringent climate change mitigation can significantly raise government expenditures and resultantly, the federal fiscal deficit. However, it will also yield economic and climate benefits in the medium and long term, restricting the average degree temperature to increase significantly. As such, it is critical to highlight that climate change is a long-term phenomenon, requiring climate justice by the international community to join hands with Pakistan to make joint efforts for climate change mitigation.

9. Under no or lower efforts to climate change mitigation , the loss in GDP will be greater than the stringent mitigation scenario. On the fiscal side, the decreased revenue collections due to less economic activity and lower productivity may yield a higher fiscal deficit. Furthermore, climate change mitigation along with efforts for more revenue collections are more promising in the long term for fiscal sustainability in line with the baseline scenario.

10. Natural disasters can significantly challenge fiscal sustainability. The 2022 floods have shown Pakistan’s high vulnerability to climate change as the disaster has demonstrated vulnerability for the people of the country. Establishing a Natural Disaster Fund (NDF) can help to mitigate fiscal deficit, at least to some extent. Furthermore, including improved tax collections alongside NDF in certain instances shows promise in alleviating fiscal risks, resulting in slight improvements in deficit levels.

11. Pakistan’s State-Owned Enterprises (SOEs) are pivotal for socio-economic development by providing essential goods and services to the public in areas where private sector investment was hindered due to various factors, such as significant capital requirements, limited profitability, trade restrictions, market size constraints, and a lack of competitive market dynamics. However, the financing requirements of SOEs and the interplay between the Government of Pakistan and its SOEs render fiscal accounts at risk. Severe weather conditions due to climate change led to shifts in water availability and energy generation, while major precipitation events, extreme temperatures, and wildfires disrupted transportation infrastructure and transmission systems. SOEs like GENCOs, WAPDA, DISCOs, and other power sector entities face significant exposure. Such risks include those associated with hydropower and thermal power plants, as well as transmission and infrastructure risks.

12. Under Public Private Partnership , there is only one project, Sialkot - Kharian Motorway, which has a VGF of only PKR 10.94 billion and is in the construction phase. Moreover, there is no liability on the part of the government under this PPP project that can be materialized as a consequence of any climate change-related event. However, there is a valid sovereign guarantee of PKR 6.9 billion, which has been issued against the operational VGF of this project. The guarantee

will expire on the completion of the debt service period, which is 10 years starting after 2 years of construction period.

Mitigation Measures

• Stable macroeconomic policies prevent excessive exchange rate fluctuations and attract long-term investments, contributing to overall economic resilience and minimizing fiscal risk.

• Accumulating foreign exchange reserves provides a financial cushion against exchange rate volatility. During periods of economic stability and favourable trade balance, the government can build foreign currency reserves and manage these reserves through investments in safe and liquid assets.

• Developing policies that support export-driven sectors increases foreign currency earnings and improves the trade balance. A stronger export sector enhances foreign exchange inflows, reducing pressure on the domestic currency and helping to stabilize it.

• Creating a conducive environment for FDI boosts foreign currency inflows and supports economic growth. Ensuring political and economic stability, improving ease of doing business, offering tax incentives, and protecting investors' rights are key strategies for attracting FDI.

• By supporting sectors that are less vulnerable to climate impacts and promoting new industries that contribute to a greener economy, the fiscal base becomes more robust and less susceptible to climate-related disruptions. Investments in research and development for sustainable technologies can also spur economic growth, create jobs, and reduce dependency on sectors prone to climate risks.

• Diversifying energy sources by accelerating the transition to renewable energy can reduce dependency on imported fuels and mitigate exchange rate and price volatility risks.

• Implementing energy efficiency measures can help to control overall demand and capacity charges. Utilizing financial instruments to hedge fuel prices and exchange rate volatility can provide more predictable cost structures.

• Strengthening regulatory frameworks and incentives for private sector investment in renewable energy is crucial to reducing the fiscal burden and ensuring sustainable energy development.

• Ensuring priorities in investment on climate resilient infrastructure is critical, making structures such that they survive natural disasters. This means that roads to be constructed should meet improved drainage levels, use better materials, and better engineering designs and principles to remain resilient.

• Measures such as early warning flood control measures should be taken proactively to reduce the extent of the problems so that rehabilitation costs may decrease in the long run.

STATEMENT OF ESTIMATED TAX EXPENDITURE

Section 8 of the Public Finance Management Act, 2019 provides that the Federal Government shall, in respect of every financial year cause to be laid before the National Assembly, Finance Bill consistent with Article 73 of the Constitution including a statement of estimated tax expenditure of the Federal Government.

2. A Tax Expenditure Report 2024 providing the details of tax expenditure in FY 2024- 25 which involves tax expenditure in Sales Tax of Rs. 2,858.721 billion, a tax expenditure in Income Tax of Rs. 476.960 billion, and tax expenditure in Customs Duty of Rs. 543.521 billion, arriving at a total estimated tax expenditure of Rs. 3,879.202 billion is being laid before the Parliament.

(Malik Amjed Zubair Tiwana) Chairman FBR

Dated: 12th June, 2024

Medium-Term Budgetary Statement (2024-25 TO 2026-27)

The Federal Government includes Medium-Term Budgetary Statement, consistent with the principles of sound fiscal and debt management, in the Annual Budget Statement to be laid before the National Assembly each year as per requirement under section 5 of the Fiscal Responsibility & Debt Limitation Act, 2005.

2. Pakistan’s economy witnessed a moderate recovery in FY2024which laid a foundation for further strengthening the growth prospects in FY2025 and over the medium term.The government has been able to stabilize the economy through various short-term policy measures and initiate the long-term sustainable growth agenda.

3. The growth trend in tax collection is indicative of improving economic conditions, gradual recovery in business activities, and effective enforcement measures. Consequently, the revenue landscape presents a promising outlook. On the other hand, higher markup payments are putting significant pressure on expenditure. However, the government's persistent efforts to curtail non-markup expenditures through austerity measures have facilitated a continuous improvement in primary surplus in FY2023-24.

4. Resource mobilization and increasing revenues to an optimum level over mediumterm is a critical challenge to meet escalating expenditures. Government is focusing all its efforts to optimize tax collection through robust measures such as revamping of FBR, supporting digitization and IT base solutions, removing Tax distortions and implementing tax regulation effectively. Similarly, realizing the importance of non-tax revenues (NTR), the Government is exploring all avenues to increase inflows and has been able to achieve its NTR targets in FY 2023-24. Going forward, government is committed to maintain this growth.

5. On the expenditure side, the Government is ensuring the support to the social sector development through health, education, youth and gender sensitive allocations. For social inclusion and pro-poor interventions, spending on BISP, Pakistan Bait-ul-Mal and Utility Stores Corporations have been increased exponentially. At the same time, austerity measures will remain in place for rationalization of non-essential spending.Stable financial growth and maintaining fiscal discipline over medium-term will ensure the Government's to create a balance between providing relief to the common man and meet other essential expenditures. The development portfolio of the Government has been increased which will ensure the sustainable development over medium term.

Climate Budget Statement

The daunting challenge of climate change posing socioeconomic risks to Pakistan demands urgent attention. The federal government is cognizant of macro-fiscal implication of climate change and looking forward to bring economic diversification to strengthen fiscal resilience by focusing on greener economy through introducing climate resilience infrastructure and new industries. Therefore, federal government has adopted climate budget as a governance system to mainstream the climate considerations into policy decision making. The green budgeting will enable government in prioritizing climate by integrating it into budgeting process and fixing responsibility for implementation, monitoring, evaluation and reporting across the line ministries and departments. Ministry of Finance has taken the major initiative of tagging climate-sensitive budgetary and expenditure data based on the National Climate Change Policy. Through a consultative process involving all stakeholders, more than of 5000 cost centers of the Federal Government under three major classifications (adaptation, mitigation, and other supporting areas) and forty minor subclassifications have been tagged successfully. These interventions will allow the Federal Government to make targeted allocations to respond climate change risks.

The Budget Tagging exercise this year focused on three types of data, BE 2023-24, RE 2023-24, and BE 2024-25. The BE 2023-24 has indicated allocation of 8.1% and 15.7% of the Running of Civil Government (ROCG) and Public Sector Development Programme (PSDP) respectively on climate sensitive areas. According to the RE 2023-24, the government was only able to spend 7.7% of the ROCG and but spent substantially more (19.3%) as percentage of the PSDP, in comparison with the original target, on climate sensitive areas. For the next FY 2024-25 in which ROCG and PSDP are substantially bigger, the government has allocated funds to tackle climate change as 7.7% of the ROCG and 15.3% of the PSDP will be spent on climate sensitive areas. In the medium term, the government plans to ensure that climate sensitive budget does not falls below 8% of the ROCG and 16% of the PSDP over medium term.

Gender budget Statement

The Article 25 states Constitution of Pakistan, 1973 provides that there will be no gender discrimination while, Article 35 directs the state to ensure full participation of women in all spheres of national life. However, despite major improvements, gender inequality is a cause of concern in Pakistan. Domestic and international data and indices suggest the wide gap between Pakistani men and women in terms of education, health, employment and economic opportunities etc.Pakistan’s economic development will remain halted without closing the gender gap considering the women constituting the 50% of population of this country.

As the Government of Pakistan works to reduce gender inequality and provision of equal rights to all citizens, one of the major impediments is the lack of genderdisaggregated data. As a first step, the government is trying to identifygender disaggregated on public expenditure. The federal government segregated gender sensitive budgets and expenditures of all ministries, divisions and departments, thereby, allowing policymakers to have a better insight on gender responsive policies and strategies. The public expenditure ofmore than 5000cost centers of the federal budget has been segregated under six major gender classifications (equality & quality of education, health & well-being, governance & data systems, employment & economic opportunity, safety & security, and agency, political participation & meaningful engagement).This major development will assist in effectively and efficiently spending meagre financial resources to tackle gender inequality. The Budget Tagging exercise this year focused on three types of data, budget estimates budget estimates (BE) financial year (FY) 2023-24, revised estimates (RE) FY 2023-24, and BE FY 2024-

25. The BE 2023-24 has indicated allocation of 10.1% and 9.5% of the Running of Civil Government (ROCG) and Public Sector Development Programme (PSDP) respectively on gender sensitive areas. According to the RE 2023-24, the government was able increase the spending to 11.3% of the ROCG and 10.1% of the PSDP on gender sensitive areas. For the next FY, 2024-25 in which ROCG and PSDP are substantially bigger, the government has allocated 9.8% of the ROCG and 7.4% of the PSDP to gender sensitive areas.

Disaster Budget Statement

Disaster risk is a combination of extreme natural events and vulnerability. Due to its diverse geographyand climate change, Pakistan is prone to a large number of extreme natural disaster triggered by natural hazards. According to World Risk Report 2023, Pakistan has been ranked as the 11^th highest disaster risk prone worldwide. The Government of Pakistan is aware of the high disaster risk and has passed laws, instituted disaster management authorities at the federal and provincial levels, and established disaster fundsto manage and mitigate the risk. However, data onpublic expenditure on disaster preparedness, recovery, and rehabilitation was not available in past. Each year, the Federal Government budgets and spends millions of rupees in diverse areas to deal with disasters. Tagging and tracking this expenditure is necessary for evidence-based policy-making and accountability. In 2024, the federal government decided to tag more than 5000 cost centers on four major disaster classifications (preparedness, response, recovery & rehabilitation, and reconstruction) through a consultative process. All ministries and divisions of the Federal Government have participated in the tagging of their respective cost centers, increasing this exercise’s outreach, transparency, and ownership. This tagging and tracking of budget and expenditure on disaster sensitive areas will assist the Federal Government in effectively mitigating risk and managing disasters.

The Budget Tagging exercise this year focused on three types of data, BE 2023-24, RE 2023-24, and BE 2024-25. The BE 2023-24 has indicated allocation of 4.5% and 1.9% of the Running of Civil Government (ROCG) and Public Sector Development Programme (PSDP) respectively on disaster sensitive areas. According to the RE 2023-24, the government was able to spend 4.4% of the ROCG and 1.9% of the PSDP on disaster sensitive areas. For the next FY 2024-25 in which ROCG and PSDP are substantially bigger, the government allocated 4.3% of the ROCG and 1.8% of the PSDP to disaster sensitive areas.

EMPLOYEES RELATED DATA AND IMPLEMENTATION OF ORGANIZATIONAL MANAGEMENT MODULE

Human Resource Data in the domain of public administration provides valuable insights on a government’s workforce composition and on the government’s ability to recruit, retain and manage its human resource capital. From fiscal point of view Human Resource information serves as an important decision-making tool to help Government rationalize its allocation of resources more efficiently and economically in its employees related data.

In the Budget Call Circular (2024-25) a serious attempt has been made to compile federal government employees’ data, with vacancy positions, and redundant posts separately for bringing greater visibility to the size of the Federal Government employees with specific emphasis on identification of posts that have remained vacant for more than three (03)years. The exercise intends to assess the financial liability involved in the continuation of redundant posts and to rationalize the size of the governments in terms of allocation of funds and resources on to the current side of expenditure.Besides conversion of employees related data on Organizational Management (OM) Module has been intensely pursued to stop manual input of data in the system, eliminating the risk for errors through creation of an Employee Record Management database for better management and administer salary plans and process annual pay raise.In this way OM Module is the most critical feature in maintaining personal information of Employees, by processing payroll entries more efficient to generate salary slips, to deduct taxes from employee payroll while strengthening the government’s working through automated work flows.

Government of Pakistan Finance Division

STATEMENT OF RESPONSIBILITY

Stated that all policy decisions with material economic or fiscal implications that the

Federal Government has made before 12th June 2024, the day on which the contents of the

economic policy statements were finalized and all other circumstances with material economic or fiscal implications of which I was aware before that day, have been communicated to the Secretary of Finance in terms of Section 10(1)(a) of Fiscal Responsibility and Debt Limitation Act, 2005.

The statement to the best of my knowledge provides for: -

• a) the integrity of the disclosures contained in the economic policy statement;

• the consistency with requirements of the Act of the information contained

• b) in the economic policy statements; and

• the omission from the economic policy statement of any decision or

• c) circumstance specified in sub-section (3) of section 8 of the Act.

(Muhammad Aurangzeb)

Minister for Finance and Revenue

Government of Pakistan Finance Division

STATEMENT OF RESPONSIBILITY

Stated that the Finance Division, in terms of Section 10(1)(b) of Fiscal Responsibility and Debt Limitation Act, 2005, has supplied to the Minister for Finance and Revenue, using its best professional judgment on the basis of economic and fiscal information available to it before 12th June 2024, the day on which the contents of the economic policy statements were finalized, an economic and fiscal statement incorporating the fiscal and economic implications of those decisions and circumstances, but any decisions or circumstances that the Minister for Finance and Revenue has determined under Sub-section (3) of Section 8 of the Fiscal Responsibility and Debt Limitation Act 2005 have not been incorporated in the statement.

IMDAD ULLAH BOSAL

Finance Division,

Islamabad, the 12th June, 2024

Secretary to the Government of Pakistan