KARACHI – According to a budget preview report by Topline Securities, the coalition government is expected to propose a budget of Rs13-15 trillion for the fiscal year 2023-24, attributing the high cost to record-high markups caused by a steep rise in interest rates.
This figure represents a 21% increase from the target set for the current fiscal year, which is Rs9-9.2 trillion.
It is worth noting that if the proposed tax target for the financial year 2023-24 is set, it would be 29% higher than the anticipated tax collection for the outgoing fiscal year, highlighting the government’s ambition to generate more revenue. However, the brokerage house stated that this is a challenging period for the government to present a budget due to stagflation, uncertainties related to upcoming elections, and concerns about bridging Pakistan’s external account funding gap.
The report emphasized that the uncertainty surrounding the financing of the US dollar funding gap is causing unease in currency, bond, and stock markets. In the past, revenue targets have deviated from actual figures by an average of 8% over the last five years, and the report predicts a similar trend in the fiscal year 2023-24 due to economic slowdown.
For the fiscal year 2023-24, the non-tax revenue target is estimated at Rs2.5 trillion (2.4% of GDP), compared to Rs1.6 trillion (2% of GDP) estimated for the current fiscal year. The report anticipates several taxation measures, including taxes on undistributed reserves, the continuation of the super tax, a shift from the final tax regime to the minimum tax regime, asset/wealth tax, higher tax on non-filers, tax on rental income, and taxes on banks, tobacco, and beverages.
Regarding development spending, the Federal Public Sector Development Programme (PSDP) for FY24 is projected to be Rs0.9 trillion, but the report suggests the possibility of major cuts due to fiscal constraints. The consolidated PSDP (federal and provincial) is expected to reach Rs2.6 trillion (2.5% of GDP) in FY24.
