Debt servicing to take lion's share in budget.

ISLAMABAD -- The government may unveil a fiscally expansionary budget of around Rs14.6 trillion - an unprecedented 50% increase over this's year's approved budget - mainly on account of a record high interest payments.

Sources told The Express Tribune that for fiscal year 2023-24, budget deficit - gap between expenses and the income - is estimated at around 7.4% of the gross domestic product (GDP). This is quite large but is still around 0.7% of GDP less than the revised deficit for the outgoing fiscal year.

Alarmingly, slightly over half of the bloated budget outlay will be earmarked for paying the interest cost.

After adding the demanded defence budget by the Ministry of Defence, the federal government may spend around 64% of the budget on debt servicing and defence, the sources said.

Finance Minister Ishaq Dar on Monday took the first presentation on fiscal year 2023-24 budget, which he wants to present in the National Assembly on June 9.

In the rupee terms, the federal budget deficit could be Rs7.8 trillion. If set at that level, the federal deficit will be nearly three-fourth higher than the original deficit target of this fiscal year.

The numbers are subject to changes proposed by the finance minister and the federal cabinet before its presentation to the cabinet.

The federal primary deficit - calculated after paying interest cost - could be 0.3% of the GDP. But it is still better than 0.7% of the GDP primary budget estimated for this fiscal year.

The sources said that the overall primary budget might be shown slightly positive on the back of provincial cash surpluses. The overall budget deficit could be around 6.9% of the GDP or Rs7.3 trillion.

The Ministry of Finance suggested an increase in the salaries of employees by 20%. But Dar deferred the matter, saying that the federal cabinet would take the decision. The finance minister also instructed reviewing the proposed allocation of Rs700 billion for the development spending in the next fiscal year, the sources added.

The budget numbers remain tentative amid the Ministry of Planning's failure to hold a meeting of the National Accounts Committee (NAC) for the approval of the outgoing fiscal year's provisional economic growth figure.

The planning ministry has thrice postponed the scheduled NAC meeting that has given rise to apprehension of manipulation of the economic growth figure that according to some initial reports was in the negative territory. Even based on the SBP model, the...

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