Budget 2020-21: No new taxes imposed as Hammad Azhar presents 'corona-budget'
Ali Ahmed Updated 13 Jun, 2020
The Pakistan Tehreek-i-Insaf (PTI) government unveiled its second annual budget for the fiscal year 2020-21 on Friday, coming at a time of high uncertainty as coronavirus pandemic stirs economic upheaval both nationally and globally, the budget is being referred as corona-budget.
Federal Minister for Industries and Production, Hammad Azhar presented the Federal Budget for the year, 2020-21 at the National Assembly. The total outlay of budget 2020-21 is Rs 7,294.9 billion. This size is 11% lower than the size of budget estimates 2019-20.
The minister initiated his speech by pointing out that the present government inherited the economic crisis, with the Current Account Deficit ballooning to $20 billion, which was brought down to $3bn, whereas, the trade deficit was $32 billion and there was no improvement in the exports.
He said that his government has paid nearly Rs5 trillion in interest payments on past debts in its two years in power.
“We inherited a battered economy,” lamented the minister. “The SBP's foreign exchange reserves had slipped from $18 billion to less than $10 billion. We were near bankruptcy when the PTI came to power. No measures had been taken to combat money laundering,” said Azhar.
“We took key decisions to stabilize the economy and we saw improvement in key indicators,” he added, amid jeering and protest from the opposition, which started distributing banners to protest against the budget.
He said that the budget deficit was reduced from 5pc to 3.8pc while IMF gave us an extended facility of $6 billion.
Azhar informed that the budget deficit would be 7pc of the GDP and has been budgeted at Rs3,195 billion for FY2021. Whereas, the government will pull out the Pakistan economy from a negative 0.4pc contraction and targets a 2.1pc GDP growth in FY 2021.
Coronavirus Pandemic
Talking about the ongoing coronavirus pandemic and its toll on the economy, Azhar in his address to NA said that the pandemic was a huge setback for the underdeveloped nations, as it hits not just health but also has social and economic implications as well. Economic activity weakened due to the prolonged lockdown imposed to curb the virus and other measures have a negative impact on the GDP rate and investment, he said.
"In these challenging times, the government's top priority is to save lives and efforts are being made to reduce the effect on people's lives and livelihoods," said Azhar.
Furthermore, the government has decided to postpone repayment of any foreign debt until FY2022 to divert critical resources to crisis management.
The minister informed that the government has enhanced poverty alleviation and social safety net expenditure to Rs208 billion, and allocated Rs2 billion for the Kamyab Jawan Programme.
The energy and food sectors will be given subsidies while Rs54 billion have been set aside for special areas, he said. "At least 820,000 fraudulent beneficiaries were removed from the Ehsaas Programme," he said.
The provincial share in federal taxes is estimated at Rs 2,873.7 billion during 2020-21, which is 11.7% lower than the budget estimates for 2019-20.
No new taxes
As per Azhar, the federal cabinet has decided not to impose new taxes in the budget for the fiscal year 2020-21.
The resource availability during 2020-21 has been estimated at Rs 6,314.9 billion against Rs 4,917.2 billion in the budget estimates of 2019-20. Whereas, the net revenue receipts for 2020-21 have been estimated at Rs 3,699.5 billion indicating an increase of 6.7% over the budget estimates of 2019-20.
The provincial share in federal taxes is estimated at Rs 2,873.7 billion during 2020-21, which is 11.7% lower than the budget estimates for 2019-20.
Receipts
The net capital receipts for 2020-21 have been estimated at Rs 1,463.2 billion against the budget estimates of Rs 831.7 billion in 2019-20 reflecting an increase of 75.93%. While Net Revenue Receipts of 3,699.5 billion have been targeted for FY 2020-21.
The external receipts in 2020-21 are estimated at Rs 2,222.9 billion. This shows a decrease of 26.7% over the budget estimates for 2019-20. The overall expenditure during 2020-21 has been estimated at Rs 7,294.9 billion, out of which the current expenditure is Rs 6,345 billion.
FBR Target
FBR failed to achieve its targeted tax revenue estimate of Rs5,555 billion that was anticipated by govt, but it managed to collect only 3,908 billion missing its target by Rs1,647 billion
The minister informed that the Federal Board of Revenue (FBR) tax collection has been budgeted at Rs4,963 billion, as compared to the number of Rs5,555 billion in last year's budget. Azhar was of the view that the government wants to present a relief budget due to the coronavirus pandemic.
Defense Budget
Federal Minister Hamad Azhar informed that the defense budget has been budgeted at Rs1.2 trillion in the budget for 2020-21.
https://www.brecorder.com/news/1003799