Budget in Brief

FEDERAL BUDGET 2024-25 GOVERNMENT OF PAKISTAN FINANCE DIVISION ISLAMABAD

PREFACE

Budget in Brief presents a summary of the Federal Budget for FY2024-25. It offers a snapshot of revenues and expenditure, the fiscal deficit target and the corresponding financing plan of the Federal Government from domestic and external sources. Moving on to greater detail, the document provides a breakdown of tax and non-tax receipts, and the projected share of provinces under the NFC Award. Details are also available on estimated expenditures for FY2024-25, with a functional classification of expenditures as well. The last segment of the Budget in Brief covers the Public Sector Development Program (PSDP).

The document is accessible on Finance Division's website (www.finance.gov.pk). The FY2024-25 budget is available in greater detail in other budget documents published by Finance Division.

Finance Division Imdad Ullah Bosal Islamabad, the 12th June, 2024 Secretary to the Government of Pakistan

CONTENTS

PART - I

Key Priorities of the Federal Government for FY 2024-25

Budget f or FY2024-25 has its f oundations on the key macro-economic and f iscal priorities of the Gov ernment. While progress on the economic f ront has been steady in recent y ears, the stage is now set f or the country to gear itself towards an era of sustained and inclusiv e growth with ref orms across all sectors of the economy . Fiscal discipline and right sizing, reducing the f ootprint of the gov ernment through priv atization, stimulating inv estments, reorienting the productiv e sector towards exports, optimal rev enue mobilization with a broader tax base, correcting energy sector imbalances and a better targeted welf are sy stem are some of the areas where the Gov ernment is determined to keep its f ocus going f orward.

The Gov ernment has set challenging rev enue targets f or FY2024-25. This commensurate with the ongoing ref orms at the Federal Board of Rev enue where end-to-end digitization is on the cards. Use of AI will supplement this initiativ e as FBR automates its processes. A compliance risk management sy stem is also being introduced to ensure compliance to tax laws. On the expenditure side, non-essential spending has been curtailed under austerity measures and SOEs are being rev amped f or improv ed management and gov ernance. Going f orward, this will create the necessary f iscal space f or enhanced pro-poor spending, climate change mitigation, and prov ision of quality public serv ices. PSDP has been allocated Rs. 1,400 billion, a historically high f igure, to ensure dev elopment work on energy and water sector projects, projects in the IT sector, and f or the special areas of AJK, GB and the merged districts of Khy ber Pakhtunkhawa.

The Budget Strategy for FY 2024-25

FY2024-25 budget is anchored in principles of sound f iscal and debt management. It prov ides a pathway f or economic rev iv al and stability , outlining strategic directions f or Gov ernment rev enue generation and spending priorities. It lay s the groundwork f or addressing f iscal def icits and reducing inf lationary pressures in the short to medium term. Fiscal consolidation, strengthening the country 's external accounts, and improv ing the balance of pay ments position are central f eatures of the FY2024-25 budget.

Main Objectives of FY 2024-25 Budget

1. Economic stability and growth through f iscal consolidation and ef f icient use of public money .

2. Bringing public debt to GDP ratio to sustainable lev els.

3. Prioritizing improv ements in the country 's balance of pay ments position.

4. Strengthening policy f ramework f or rev italizing the priv ate sector, f ostering entrepreneurship, encouraging inv estment, and promoting innov ation to stimulate economic growth.

5. Supporting v ulnerable section of society through pro poor initiativ es.

6. Improv ing serv ice deliv ery /public good by f unneling more f unds into PSDP, introducing sector specif ic ref orms and encouraging innov ation.

7. Education and skill dev elopment of y outh.

8. Integrating green and gender responsiv e budgeting into public f inance management.

PART - II

Table - 1 Budget 2024-25 at a Glance Table-1 presents position of overall Resources and Expenditure for the FY 2024-25.

Table - 2

Fiscal Deficit & Financing of Budget 2024-25 Table-2 shows Fiscal Deficit and Financing for FY 2024-25. (Rs. in Billion)

Table - 3

BE & RE of FY 2023-24 and BE of FY 2024-25 Table-3 presents important percentages of Budget & Revised Estimates of FY 2023-24 and Budget Estimates of FY 2024-25.

PART - III

DETAILED BUDGET ESTIMATES Budget Estimates 2023-24 Revised Estimates 2023-24 Budget Estimates 2024-25

TABLE - 4

REVENUE RECEIPTS

Table-4 presents the detail of Revenues collected by FBR as given in Table-1, Part-II.

(Rs in Million)

TABLE - 5

NON TAX REVENUE RECEIPTS

Table-5 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-gov ernmental f iscal relationship, Article 160 of the Constitution prov ides f or setting up of a National Finance Commission (NFC) with interv als not exceeding f iv e y ears. The mandate of NFC is to make recommendations to the President f or the distribution of resources between the Federal and Prov incial Gov ernments. The recommendations of the NFC are giv en legal cov er through a President's Order No. 5 of 2010. The relev ant prov isions of President's Order No. 5 of 2010 as amended v ide No. 6 of 2015 are as under:

(i) Distribution of Revenues.- (1) The div isible pool taxes in each y ear shall consist of the f ollowing taxes lev ied and collected by the Federal Gov ernment in that y ear, namely :─

• (a) taxes on income;

• (b) wealth tax;

• (c) capital v alue tax;

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

• (e) export duties on cotton;

• (f ) customs duties;

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

• (h) any other tax which may be lev ied by the Federal Gov ernment.

(2) One percent of the net proceeds of div isible pool taxes shall be assigned to Gov ernment of Khy ber Pakhtunkhwa to meet the expenses on war on terror.

(3) Af ter deducting the amounts as prescribed in clause (2), of the balance amount of the net proceeds of div isible pool taxes, f if ty -six percent shall be assigned to prov inces during the f inancial y ear 2010-11 and f if ty -sev en and half percent f rom the f inancial y ear 2011-12 onwards. The share of the Federal Gov ernment in the net proceeds of div isible pool shall be f orty -f our percent during the f inancial y ear 2010-11 and f orty -two and half percent f rom the f inancial y ear 2011-12 onwards.

(ii) Allocation of shares to the Provincial Governments.- (1) The Prov ince-wise ratios giv en in clause (2) are based on multiple indicators. The indicators and their respectiv e weights as agreed upon are:-

(2) The sum assigned to the Prov incial Gov ernments under Article 3 shall be

distributed amongst the Prov inces on the basis of the percentage specif ied against each:─

(3) The Federal Gov ernment shall guarantee that Balochistan prov ince shall receiv e the projected sum of eighty -three billion rupees f rom the prov incial share in the net proceeds of div isible pool taxes in the f irst y ear of the Award. Any shortf all in this amount shall be made up by the Federal Gov ernment f rom its own resources. This arrangement f or Balochistan shall remain protected throughout the remaining f our y ears of the Award based on annual budgetary projections.

(iii) Payment of net proceeds of royalty on crude oil. ─Each of the prov inces shall

be paid in each f inancial y ear as a share in the net proceeds of the total roy alties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Prov ince in that y ear 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 Prov inces shall be paid in each f inancial y ear as a share in the net proceeds to be worked out based on av erage rate per MMBTU of the respectiv e prov ince. The av erage rate per MMBTU shall be deriv ed by notionally clubbing both the roy alty on natural gas and dev elopment surcharge on Gas. Roy alty on natural gas shall be distributed in accordance with clause (1) of Article 161 of the Constitution whereas the dev elopment surcharge on natural gas would be distributed by making adjustments based on this av erage rate.

(2) The dev elopment surcharge on natural gas f or Balochistan with ef f ect f rom 1st July 2002, shall be re-worked out hy pothetically on the basis of the f ormula giv en in clause (1) and the amount, subject to maximum of ten billion rupees, shall be paid in f iv e y ears in f iv e equal installments by the Federal Gov ernment 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 y ear, as grants-in-aid of the rev enues of the prov ince of Sindh an amount equiv alent to 0.66% of the prov incial share in the net proceeds of div isible pool as a compensation f or the losses on account of abolition of octroi and zilla tax.

(vi) Sales tax on services.- NFC recognizes that sales tax on serv ices is a Prov incial subject under the Constitution of the Islamic Republic of Pakistan, and may be collected by respectiv e Prov inces, if they so desired.

(vii) The President has constituted 10th NFC on 21st July , 2020 f or consideration on distribution of resources af resh.

Detail of Prov incial share of Federal Taxes f or budget estimates and rev ised estimates of 2023-24 and budget estimates of 2024-25 are giv en below:-

TABLE - 6

DETAILS OF DIVISIBLE POOL TAXES (TRANSFERS TO PROVINCES)

(Rs in Million)

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 of Federation (Net):

(Rs in Million)

TABLE - 9

EXTERNAL RESOURCES

Table-9 indicates the details of Net External Receipts and shows details of inflow minus repayments.

(Rs in Million)

TABLE - 10

CURRENT EXPENDITURE*

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

(Rs in Million)

*RE 2023-24 as of 24th May, 2024.

TABLE - 11

FUNCTION WISE CURRENT EXPENDITURE

Table-11 shows details of Current expenditure which is div ided into Ten (10) f unctional

items as per Charts of Accounts i.e. how much is utilized of the Gov ernment.

(Rs in Million)

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

(1) GENERAL PUBLIC SERVICE

(Rs in Million)

Contd….

(Rsin Million)

(2) DEFENCE AFFAIRS AND SERVICES

(Rs in Million)

(3) PUBLIC ORDER AND SAFETY AFFAIRS

(Rsin Million)

(4) ECONOMIC AFFAIRS

(5) ENVIRONMENT PROTECTION

(Rsin Million)

(6) HOUSING AND COMMUNITY AMENITIES

(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 abov e allocations under the Current Budget as per ten classif ication heads, the Federal Gov ts prov ides f unds f or v arious purposes.

In order to allev iate the impact of inf lation on citizens, especially the poor segments of society , the Federal Gov ernment spends a f airly large sum on prov iding power and f ood subsidies.

TABLE - 12 SUBSIDIES

Table-12 shows detail of subsidies. A single figure is given in Table-1,

Part-II.

(Rs in Million)

TABLE - 13

GRANTS AND TRANSFERS

Table-13 giv es details of Grants and Transf er to prov inces and other entities as prov ided by the Federal Gov ernment. A single f igure is giv en in Table-1, Part-II.

(Rs in Million)

Contd…..

(Rs in Million)

(Rsin Million)

Contd…

(Rsin Million)

Contd…

(Rs in Million)

TABLE - 14

CURRENT LOANS & ADVANCES

Table-14 shows Current Loans & Adv ances as prov ided by Federal Gov ernment to Gov ts. of AJK, GB and v arious institutions as well as Gov t. Serv ants to enable them to meet their f inancial requirements. The details are as under:

TABLE - 15

CURRENT INVESTMENTS

Table-15 shows detail of Current Inv estments through equity . The Federal Gov ernment inv ests f unds in v arious Companies, Banks etc, to earn Div idends which results an increase in Gov ernment's Rev enues:

(Rsin Million)

TABLE - 16

DEVELOPMENT LOANS AND ADVANCES

Table-16 shows Dev elopment and External Dev elopment Loans & Adcances as made by Federal Gov ernment to Prov inces, AJK & GB, PSEs, Financial / Non-Financial Institutions, District Gov ernments / TMAs and others to assist them in carry ing out their Dev elopment Programmes.

Dev elopment Loan and Adv ances are part of project aid disbursed by f oreign donors and are used to Finance PSDP. The loans are re-lent by the Federal Gov ernment to Prov incial Gov ernments and PSEs.

(Rsin Million)

Public Sector Development Programme (PSDP)

The Public Sector Dev elopment Programme (PSDP) is the main instrument f or improv ing the socio-economic conditions in the country and achiev ing the macroeconomic & dev elopment objectiv es and targets set by the gov ernment, which y ield maximum benef its f or the society in the shortest possible time.

TABLE - 17

PSDP 2024-25

Table-17 shows the details of PSDP size f or FY 2024-25 in respect of Ministries / Div isions / Departments / Corporations and f or Special Packeges / Relief , explaining the f igures of PSDP giv en in Table-1, Part-1.

Contd….

Contd….

(Rs in Million)

TABLE - 18

CLIMATE, GENDER AND DISASTER