The BUDGET 2023-24, which was approved by the legislature yesterday following the addition of significant budgetary restraint measures to entice the IMF, may revive the rescue agreement that has been dormant since last November.
The IMF’s concerns over the initial budgeted deficit of 6.5 percent of GDP have been mostly allayed, according to Finance Minister Ishaq Dar, by the enforcement of additional taxes totaling Rs215 billion and spending cuts totaling Rs85 billion.
The IMF had stated that the initial budget “misses the opportunity to broaden the tax base in a more progressive way” in its remarks following its release in May. The lender has also taken issue with other financial measures, such as the “no-questions-asked scheme” to draw in fresh dollars from Pakistanis living overseas. Sadly, despite satisfying the IMF requirement, the new budgetary adjustments reveal that the administration has missed yet another chance to increase the revenue base.
There has been no significant effort made to include undertaxed industries like retail, agriculture, and real estate in the net; instead, taxes totaling Rs438 billion have been imposed; in the initial draught, taxes totaling Rs223 billion were introduced. Additionally, there are no plans for SOE reform.
revised budget for 2023-2024. Ishaq Dar presented the revised budget, which focused on reducing the fiscal deficit. The budget aims to increase the revenue collection and reduce the non-development expenditure. The government has also planned to increase the tax base and reduce the tax rate for the corporate sector. The revised budget has increased the allocation for development projects and social welfare programs. The government aims to spend more on education, health, and social protection programs. The revised budget also aims to reduce the inflation rate and increase the economic growth rate. Overall, the revised budget is a step towards sustainable economic growth and development.
The revised budget has received mixed reactions from the opposition and the general public. Some people believe that the revised budget is a positive step towards economic stability, while others criticize the government for not doing enough for the poor and marginalized communities. The opposition parties have criticized the government for not increasing the salaries of government employees and for not allocating enough funds for public sector development projects. However, the government has defended its budget, stating that it is a balanced and realistic budget that takes into account the current economic situation of the country.
Although the government doubled the withholding tax on real estate transactions in an effort to raise Rs35 billion, it is unlikely that this move will result in the desired income without significant sector documentation. The organised corporate sector and the salaried classes will be responsible for bearing a large portion of the higher tax burden.
How far along are the remaining two requests, which are the removal of exchange rate restraints to prevent the rupee from plunging into a free collapse and the discrepancy between the two sides’ projections of the external funding shortfall for the current fiscal year, according to the IMF?
