Pakistan budget
The total liquid foreign reserves of Pakistan stood at $9,334.8 million while reserves held by the central bank reached $3,912.2 million. Image Credit: Reuters

Islamabad: Pakistan’s government will target a fiscal deficit of 6.54 per cent of GDP for the 2023-24 fiscal year, its finance minister said on Friday, slightly below the current year’s revised estimate of 7 per cent.

Finance Minister Ishaq Dar announced the target during a speech to the national legislature on the government’s annual budget. A source had said earlier in the day the budget was seen targeting a deficit of 7.7 per cent of GDP for the 2023-24 fiscal year, which starts on July 1.

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The budget needs to satisfy the IMF to secure the release of stuck bailout money for Pakistan, which is due to hold a general election by November.

The total spending target would be Rs14.46 trillion ($50.45 billion), Dar said, with Rs1.8 trillion going to defence. It would target debt servicing of Rs7.3 trillion.

Incentives for overseas Pakistanis
Dar in his budget speech, said that the government had introduced incentives for those overseas Pakistanis who send their remittances through formal channels.

The minister said that the government had abolished two per cent final tax on purchase of immovable property through foreign remittances. He said that the government had introduced a new card namely Diamond Card in the Remittances Card category for those who would send more than $50,000 foreign remittances annually.

The Diamond Card beneficiaries would enjoy one non-prohibited bore license, Gratis Passport, preferential access to Pakistani Embassies and counsels and fast-track immigration service at Pakistani Airports, he added.

He said that a new scheme of prizes for Remittances Card Holders would also be introduced.
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Dar reiterated that the government hoped to get an agreement with the IMF soon, echoing comments made earlier in the day by Prime Minister Shehbaz Sharif as he addressed his cabinet.

Sharif’s government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month.

Inflation for the next fiscal year is expected to come in at 21 per cent, Dar said, as Reuters reported earlier this week. Inflation in May was at a record high of nearly 38 per cent.

Budget highlights for 2023-24
Targets 3.5% economic growth and Fiscal deficit target set at 6.54% of GDP for 2023/24. Targets primary surplus at 0.4% of GDP

Targets inflation at 21%

Total spending target of 14.46 trillion rupees. Defence expenditure estimated at 1.8 trillion rupees

Targets total tax revenue of 9.2 trillion rupees. Targets total non-tax revenue of 3 trillion rupees

Targets exports of $30 billion

Estimates debt servicing funds of 7.3 trillion rupees

No new tax on industrial sector