Finance Minister unveils Federal Budget 2017-18 with Rs4.75tr outlay

Finance Minister unveils Federal Budget 2017-18 with Rs4.75tr outlay

Lawmakers gathered in the National Assembly in Islamabad in anticipation of the government’s announcement of the Federal Budget 2017-18.

Finance Minister Ishaq Dar unveiled the budget amidst disturbance in Parliament as opposition lawmakers protested the treatment of agitating farmers who had gathered at D-Chowk in the federal capital earlier in the day.

Opposition lawmakers eventually walked out in protest in the middle of the finance minister’s speech.

“This is the fifth budget being presented by the PML-N government,” the finance minister observed in his opening remarks, terming it an achievement for Pakistan’s democracy.

Reflecting on the government’s growth story over the last four years, the finance minister claimed that the government had turned the economy around.

Touting the 5.3pc growth in GDP announced yesterday, Dar also highlighted an improvement in the country’s fiscal position and a reduction in load-shedding for industries.

“We will be one of the largest economies by 2020,” the minister claimed.

“Just four years ago, this extraordinary turnaround would have seemed impossible,” he said.

“We used to take loans not just for development expenditures but for other expenditures as well. These loans had become a drag on our national growth. Weaning the country off them is no mean feat,” he said.

International observers are cognisant of Pakistan’s successes, and Standard & Poor’s, Moody’s and Fitch have raised their ratings for the country, Dar said.

“We have performed better than the global average growth rate,” the minister said.

“Our agricultural sector is on path to improvement,” he said. “All major crops have registered growth over the year.”

“This growth is attributable to the extraordinary measures for agriculture announced last year,” Dar claimed.

The finance minister spoke at length about the Pakistan Economic Survey, released yesterday, using data included in the report to substantiate the government’s ‘economic turnaround’ narrative.

Key features

  • The total outlay of the budget is Rs4.75 trillion

  • Total tax revenues target has been set at Rs4.33tr , of which the Federal Board of Revenue will collect Rs4.01tr.

  • The development expenditure for next year will beRs1.001tr .

  • The defence budget has been set at Rs920.2bn .

  • The minimum wage will be set at Rs15,000 .

  • Agriculture, SMEs and IT will be given tax breaks.

  • By summer 2018, nearly 10,000MW of electricity will be added to the national grid, eliminating load-shedding completing.

  • BISP will be allocated Rs121b for 5.5 million beneficiaries.

Agriculture

  • Nearly Rs1.001tr will be given out in agricultural loans next year.

  • Agricultural credit will be extended at 9.9pc on Rs50,000 amount to farmers who hold 1.2m acres of land.

  • Imported fertilizer will be subsidized.

  • Urea will be sold at Rs1,400 per bag.

  • Other fertilisers’ prices will also be kept constant through subsidies.

  • The State Bank will also help link the banking system to the land record management system to facilitate farmers in securing loans.

  • Tubewells will be provided subsidised electricity.

Industrials

  • Zero-rated schemes for textiles, leather and other sectors will be continued.

  • To promote textiles, cotton hedge trading will be introduced. A brand development fund will also be created.

  • An online business-to-business and business-to-consumer portal for textile trading will be introduced.

  • Custom duty on raw hides will be eliminated.

Housing

  • Government will provide guarantees for housing loans for up to Rs1 million.

Infrastructure

  • Pakistan Development Fund will be established.

  • Pakistan Infrastructure Bank will be established to provide loans to private infrastructure projects.

Financial sector

  • Microfinance institutions will provide loans to low-income individuals worth Rs8bn in total.

  • Withholding tax on branchless banking will be eliminated.

  • SMEs will be provided easy-to-access loans through a risk mitigation facility secured with Rs3.5bn from the State Bank.

Information Technology

  • An IT park is being established with the help of South Korea

  • New IT companies will be exempted from income tax for the first three years.

  • IT exports from Gilgit, Fata and will be exempted from sales tax.

  • Withholding tax on mobile phones to be reduced from 14pc and custom duty on smartphone sets will be cut to Rs650 per set.

Development expenditures

  • Federal development expenditures have been increased 37pc.

  • Energy and infrastructure will get 67pc of the PSDP budget. Rs411bn will be allocated for this.

Energy

  • Loadshedding will be history by next year.

  • Rs401bn rupees will be allocated to energy projects.

  • Energy for All program will receive Rs12.5bn

  • Dasu project Rs54bn.

  • LNG projects to receive Rs70bn.

  • Diamer Bhasha will receive Rs21bn.

  • Neelum Jhelum will receive Rs19bn.

  • Tarbela-IV will receive Rs16.4bn.

  • Jamshoro plant will receive Rs16.2bn.

  • Transmission and distribution lines from Matiari to Lahore will be builty.

Water

  • Government is focusing on building dams and improvement the water distribution infrastructure.

  • Rs38bn will be allocated under this head.

Roads and highways

  • Rs320bn will be allocated to national highways.

Railways

  • Rs45.9bn to be allocated to Railways, including for 75 new engines, 830 bogies and 250 coaches and the Peshawar to Karachi railway line.

Human development

  • Rs35.7bn for Higher Education.

  • Health programs will receive Rs49bn.

  • Hospitals will receive Rs10bn.

  • Rs12.5bn will be allocated for Clean Drinking Water for All.

  • Sustainable development goals will get Rs30bn.

Gwadar

  • 31 new projects, including a new airport, 200-bed hospital and desalination plants.

CPEC

  • Rs180bn have been allocated for CPEC projects.

Special projects

  • Rs45.6bn for projects Azad Jammu & Kashmir, Gilgit Baltistan and Fata.

Security

  • All Army officers and jawans will receive a 10pc special allowance other than the salary increment in lieu of their sacrifices in Pakistan’s war against militancy.

Major heads

  • Rs2,384bn to be given to provinces.

  • Defence budget will be Rs920bn.

  • PSDP will be Rs1,001bn

  • Budget deficit will be limited to 4.02pc of GDP, contingent on spending on the ‘war against terrorism’,

Taxes

  • Target to raise tax revenues to 15pc of GDP.

  • Corporate sector will get relief in the form of a 30pc effective corporate tax rate.

  • Islamic banking will face the same tax regime as commercial banks.

  • Withholding taxes on new car registrations have been cut for lowest three categories.

  • Cement FED will be increased from Rs1 per kilogramme to Rs1.25/kg,

  • Commercial import of clothing will be taxed at 6pc.

  • Steel sector will be taxed at 10.5pc compared to the current 9pc.

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