The federal budget 2022-23: an overview.

Byline: NAZIR AHMED SHAIKH

The total size of the federal government expenditure is estimated around Rs9.5 trillion, which is higher by nearly Rs350 billion or 4% over this year's revised budget of over Rs9 trillion. There was an increase of 11% in expenditures if compared with the original budget of Rs8.5 trillion, which now has become redundant. The current expenditures are targeted to grow only over 2% to Rs8.6 trillion against the revised estimates. The gross revenue target has been set at Rs9 trillion - higher by 23% that the government wants to achieve through combination of taxes and non-tax measures, including the petroleum levy on petrol and high speed diesel.

The major challenge will be arranging a record $41 billion in foreign loans in next fiscal year to remain afloat. Pakistan will be requiring to repay $21 billion foreign loans, it will be needing another $12 billion for current account deficit financing and $8 billion more for increasing foreign exchange reserves to $18 billion. Earlier, during the Doha round of talks, the government had presented a primary budget deficit framework, which the IMF did not agree to. The coalition government gave up to the IMF's demand to exhibit primary budget surplus, pitching it at Rs152 billion by planning fiscal consolidation of nearly Rs1.8 trillion or 2.2% of the GDP in the next fiscal year. The IMF talks have so far remained inconclusive and it may take some time after the finance minister announced certain measures contrary to the desire of the global lender. While setting the inflation target at 11.5%, the total size of the 2022-23 budget will be Rs9.5 trillion, higher by only 4.6%, which makes the expenses forecast unrealistic from day one. It will be very difficult for the government to virtually freeze expenses in the next fiscal year when there will be a significant increase in cost of living. The coalition government may unveil a nearly Rs9.5 trillion budget that has been prepared on a highly ambitious target of a mere 4% increase in expenses but one-fourth surge in revenues aimed at meeting a core condition of the International Monetary Fund.

The federal government has finally agreed to exhibit a primary budget surplus of nearly Rs200 billion by planning fiscal consolidation of nearly Rs1.8 trillion or 2.2% of the Gross Domestic Product in the next fiscal year. The budgetary framework is projecting about 0.3% of the GDP primary budget surplus - showing that its net income will be...