In a clear footprint of the IMF program, the Federal Cabinet has approved the Budget Strategy Paper (BSP) for FY22 envisaging significantly higher contribution from provinces to finance fiscal deficit and almost a freeze on major expenditures like defence. For next year, BSP targets economic growth rate of 4.2%, 8% rate of inflation, budget deficit at 6% of GDP and 84.3% of public debt to GDP ratio. Gross federal revenues are estimated to go up by more than 25% to PKR 7.99Tn as the govt. pushes forward a series of tax adjustments like widening of GST and income tax net. Budgetary allocation for FY22 has been put at PKR 1.33Tn for defence just 2.7% higher than FY21. Estimates for debt servicing have been put at PKR 3.1Tn for next year — about 6.3% higher than the current year.
14/4/2021