The coming budget for 2004-05, to be presented on June 12 in Parliament, would cross Rs 900 billion (Rs 700 billion current expenditures and Rs 202 billion development spending).
CBR revenue has been set at Rs 580 billion and rest of the revenue would come from surcharges and non-tax revenue. Total revenue would be Rs 820 billion, whereas Rs 180 billion would be the fiscal deficit for 2004-05. Total consolidated volume of the budget would be over one trillion rupees.
The defence spending would be around Rs 190 billion. There would be over Rs 180 billion allocated for subsidies, grants and other expenditures. General administration would be near Rs 80 billion. Debt servicing would be near Rs 250 billion.
There would be no new tax, and huge incentives would come for housing and construction related industries like cement, steel and etc. There is likely chance of increase in pays of government employees.
For the out going year, the fiscal deficit has been reduced to 3.3 percent in 2003-04, which had come to 3.7 percent in 2002-03. This trend was declining from 4.3 percent of 2000-01. Rates of electricity would be reduced by 7 percent passing Rs 9 billion savings of Wapda.
The budget would most likely be pushing the economic recovery process even further, giving incentives for investment in Pakistan.
Launching Economic Survey. Finance Minister Shaukat Aziz had attributed this decline to sustained efforts, as the fiscal deficit has been on a declining trend since 1999-2000. Defence spending reached Rs 180 billion and interest payments were Rs 202 during 2003-04.
He said that as a result of prudent fiscal management and better tax enforcement, Pakistan succeeded in achieving this level of fiscal deficit.
Total revenue is estimated at Rs 780.3 billion in 2003-04 as against Rs 720.8 billion last year-an increase of 8.3 percent. This increase is due to the substantial increase in federal and provincial tax revenues, which grew by 6.7 percent and 20.2 percent, respectively. The consolidated tax receipts grew by 8.1 percent while non-tax revenue increased by 8.7 percent.
The details of the ongoing fiscal year are given as follows:
TOTAL EXPENDITURE: Total expenditure is estimated at Rs 957.7 billion in 2003-04, which is 6.6 percent higher than last year. Out of this current expenditure is estimated at Rs 793.6 billion (82.9 percent of total expenditure) while development expenditure amounted to Rs 164.1 billion (17.1 percent of total outlay).
The current expenditure, which was 16.4 percent of GDP last year has declined to 14.5 percent in the current year. There are three major components of current expenditure, namely, interest payments, defence, and expenditure on civil administration.
INTEREST PAYMENTS: Interest payments comprise the single largest item of total, as well as current expenditures. Their share in total expenditure declined from 32.7 percent in 2000-01 to 21.1 percent in 2003-04 while that in current expenditure dropped from 36.3 percent in 2000-01 to 35.0 percent in 2001-02 and further to 25.5 percent in 2003-2004.
In absolute terms, interest payments, which were at Rs 243.3 billion in 2001-02 declined to Rs 202.5 billion in 2003-04- a reduction of 17.4 percent.
This decrease can be attributed to prudent debt management and a sharp decline in interest rates.
DEFENCE EXPENDITURE: Defence expenditure in 2003-04 was budgeted at Rs 160.0 billion - almost no change from last year.
However, because of increased activity along the country's western border the defence spending is estimated at Rs 180 billion. As a percentage of GDP, defence spending remained at last year's level of 3.3 percent. As percentage of total outlay, defence spending is 18.8 percent.
GENERAL ADMINISTRATION: The third major component of current expenditure is expenditure on General Administration. Expenditure under this item stands at Rs 70.5 billion, which is 15.8 percent higher than last year. It accounted for 8.9 percent of current expenditure and 1.3 percent of GDP during 2003-04 as against 7.7 percent of current expenditure and 1.3 percent of GDP last year.
PROVINCIAL CURRENT EXPENDITURE: Provincial current expenditure grew by 6.5 percent in 2003-04-increasing from Rs 191.9 billion to Rs 204.4 billion. However, provincial current expenditure as a percentage of total expenditure declined from 21.4 percent in 2002-03 to 20.3 percent in 2003-04. As a percentage of GDP, provincial current expenditure has declined from 4.0 percent in 2001- 02 to 3.7 percent in 2003-04.
PUBLIC SECTOR DEVELOPMENT PROGRAMME (PSDP): The size of the Public Sector Development Programme (PSDP) during the current fiscal year is projected to increase by 17.6 percent compared to last year. The approved size of the current year's PSDP is projected at Rs 152.0 billion as against Rs 129.2 billion for 2002-03. At least 40 percent of the resources have been provided for social sectors. PSDP also supports the governance reforms and reforms intended to improve public expenditure management in the social sectors.
FEDERAL BUDGET 2003-04: The budgeted federal gross revenue receipts of Rs 753.0 billion for 2003-04 are 7.7 percent higher than the revised estimates of Rs 673.6 billion for 2002-03. These revenue receipts comprise tax revenue (Rs 573.6 billion) and non-tax revenue (Rs 152.2 billion).
Tax revenue is to increase by 7.4 percent mainly on account of better tax administration and reforms in the CBR. CBR revenue is estimated to grow by 10.5 percent (net basis).
Total expenditure of Rs 753.3 billion is estimated to be 6.7 percent higher than last year. The Public Sector Development Program (PSDP) is estimated at Rs 152.0 billion, which is 17.6 percent higher than that of the previous year.
The notable development in the federal budget has been that revenue was set to increase at a faster pace than expenditure and interest payments have declined substantially.
It is to be noted that the federal government distributes specified share of tax revenues to provinces and the remaining (net) revenue is being utilised by the federal government. Net revenues of the federal government increased by 11.9 percent, rising from Rs 480.8 billion to Rs 538.2 billion.
The transfer to provinces increased by 11.4 percent to Rs 214.8 billion in 2003-04 from Rs 192.8 billion last year.
PROVINCIAL BUDGETS: The total outlay of the four provincial budgets for 2003-04 stood at Rs 356.4 billion, which is 12.7 percent higher than the outlay for last year (Rs 316.2 billion). NWFP witnessed the highest increase of 29.3 percent in budgetary outlay followed by Punjab (14.8 percent), Sindh (5.2 percent) and Balochistan (3.1 percent).
The overall provincial revenue receipts for 2003-04 are estimated at Rs 294.6 billion, which is 6.1 percent higher than last year.
Tax revenue accounted for 86 percent of overall revenue receipts and amounted to Rs 254.7 billion which is 0.6 percent lower than last year and non-tax revenue is estimated at Rs 39.9 billion which is 87 percent higher than last year.
The total budget outlay of Rs 356.4 billion is shared in the ratio of 80 percent and 20 percent between current and development expenditures, respectively.
The allocations for development expenditure are 22 percent higher than last year and for current expenditure, they are higher by 7 percent.
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