ISLAMABAD – The government’s objective for the upcoming 2023-24 budget is to raise $2 billion by issuing Eurobonds. The budget planners are facing difficulties in managing the numbers due to a lack of foreign loans inflow and the absence of an active International Monetary Fund (IMF) programme.
Despite these challenges, the government aims to secure approximately $22 billion in foreign loans for the upcoming budget. The process of crunching the numbers is still ongoing, and it is anticipated that Islamabad will be able to generate $2 billion by launching Eurobonds in the next fiscal year.
In the previous fiscal year, the government had intended to issue international bonds but was unable to do so primarily due to the non-revival of the IMF program, along with poor credit ratings, increased bond rates, and associated risks.
Additionally, the government has proposed implementing an income levy on all types of assets, as well as raising withholding taxes on cash withdrawals and motor vehicle registrations in the 2023-24 budget.
The government plans to increase salaries and pensions for government employees in various grades. Employees from grade 1 to 16 can expect a salary and pension hike of around 30%, while those in grades 17 to 22 can anticipate a raise of approximately 20%. Notably, the pension bill is projected to exceed the salary bill for the federal government.
The total budget outlay for the upcoming budget is estimated at over Rs14.2 trillion. The Federal Board of Revenue (FBR) has set a target of collecting taxes ranging from Rs9.2 to Rs9.5 trillion, while the non-tax revenue target is set at Rs2.5 trillion.
To achieve a primary balance of 0.1% of GDP, the provinces are expected to generate a 1% revenue surplus, allowing the primary balance to become slightly positive in the next budget. Debt servicing will account for a significant portion of the budget, consuming approximately Rs7.5 trillion.