The Khyber-Pakhtunkhwa (K-P) government has presented a surplus budget for the upcoming fiscal year in the provincial assembly, even before the announcement of the federal budget, a move unprecedented in the country's history. Finance Minister Aftab Alam unveiled the Rs1,754 billion budget for fiscal 2024-25 [July-June], boasting a surplus of Rs100 billion. Notable allocations include Rs416.3 billion for the Annual Development Programme (ADP), a 10% increase in salaries and pensions, and a minimum wage raise to Rs36,000 per month. The government has implemented reforms in sales tax, property tax, tobacco tax, and cess to enhance the tax net without increasing taxes. The government earmarked funds for various sectors including education, health, peace and order, roads and infrastructure, social welfare, minerals, industry, tourism, agriculture, and energy. The K-P budget announcement has been criticized by Federal Minister for Kashmir Affairs Amir Maqam as a violation of the Constitution and the established procedure.
In a separate development, the recent federal budget of Pakistan, presented in Parliament by Finance Minister Muhammad Aurangzeb on June 12, 2024, has faced criticism due to deficits in various areas. The limited fiscal space has made it difficult to provide relief to heavily burdened taxpayers. The budget comes amidst a dangerous political confrontation between the government and the opposition, leading to a rising sense of social disorder. Pakistan's performance in international sports, apart from cricket, has been poor, indicating a lack of social capital and human development. Pakistan ranks low in the UNDP's Human Development Report, placed at 164 out of 193 countries. The decline in social development can be reversed with focused efforts. The writer emphasizes the need to focus on social development alongside economic development in the budget.
According to a recent article by The Express Tribune, Pakistan will have to finance a budget deficit of Rs8,500 billion for the federal budget 2024-25, which is 45% of the total budget. Rs7,800 billion will be financed through domestic financing at a lending rate of around 20%. The net federal receipts for 2024-25 would be Rs10,377 billion. The fiscal deficit would be 82% of the net federal revenue. Policymakers must strike a balance between debt servicing and essential expenditures. Suggestions include cutting policy rates, rationalizing taxation, implementing subsidy reforms, rationalizing fiscal expenditure, managing non-budgetary debt drivers, reforming state-owned enterprises, controlling expenditures, promoting growth, enhancing exports and remittances, enhancing fiscal revenue collection, and complying with the Fiscal Responsibility and Debt Limitation Act 2005. The latest budget and related actions are criticized as lacking economic or fiscal policy or management. [331d6cfc]