A major part—PKR 5.45 trillion or nearly 58 per cent of the budget—will be spent only on two heads: debt servicing and defence. The debt servicing cost has witnessed a rise of over PKR 806 billion or 26 per cent within a year. The domestic debt servicing will eat up nearly PKR 3.5 trillion while another PKR 511 billion will be spent on foreign debt servicing.

In the outgoing fiscal, the share of these two components was half of the total budget. The defence services share remained constant.

The government has proposed PKR 740 billion in new taxes, including PKR 440 billion tax measures proposed by the Federal Board of Revenue (FBR).

Some of the major relief measures will be offset by the increase in petroleum prices rates due to a PKR 50 per litre levy along with 17 per cent sales tax. Retailers have been taxed at a fixed rate through electricity bills. No measures were announced to curtail the current account deficit or imports, according to Pakistani media reports.

“These are difficult times brought upon us by recent years of economic mismanagement. Through this budget, my government will steer our way out of these challenges by taking tough decisions while minimising the impact on vulnerable segments,” Miftah said in his budget speech.

While setting the inflation target at 11.5 per cent, Miftah said the gross revenue target has been set at PKR 9 trillion—higher by 23 per cent that the government wants to achieve through combination of taxes and non-tax measures, including the levy on petrol and high speed diesel.

Fibre2Fashion News Desk (DS)