cash Pakistan’s government, which is facing a deficit of funds, has highlighted a number of serious risks to next year’s budget and the medium-term outlook. These include lower-than-expected economic growth, unexpected climate or natural disasters as well as poor performance of public sector entities. In a written statement on fiscal risks presented to parliament, Finance Minister Mohammad Aurangzeb and Secretary Imdadullah Bosal said three risks – higher than expected interest rates, lower than expected non-tax revenue collection and higher subsidies – have the biggest impact on fiscal rates at all levels.
The growing fiscal deficit
“The fiscal deficit and debt are rising due to declining revenues, increased subsidy expenditure and potential funding requirements due to high interest rates,” the statement was quoted as saying in the newspaper Dawn. It stressed the interconnectedness of fiscal policy and the need for a comprehensive approach to address fiscal challenges. These risks are also important because a record revenue target of Rs 12,970 billion has been set for the Federal Board of Revenue of Pakistan for the next fiscal year, which is 40 percent more than the target of Rs 9,415 billion during the current fiscal year. The target for the current fiscal year has not been achieved.
Will borrow 23 billion dollars
Pakistan plans to borrow at least $23 billion in the upcoming fiscal year 2024-25. This includes bilateral debt of $12 billion. Pakistan follows a July 1 to June 30 fiscal year. According to budget documents, Pakistan’s budgetary allocation of Rs 2,122 billion for defense for 2024-25 is just 1.7 percent of the cash-strapped country’s GDP. It is the same as last year. However, it is higher than the Rs 1,804 billion set for the outgoing fiscal year 2023-24. Pakistan Finance Minister Muhammad Aurangzeb on Wednesday presented a heavily taxed budget of Rs 18,877 billion for the fiscal year 2024-25. According to the finance minister’s speech and various budget documents, the Rs 2,122 billion allocated for FY 2024-25 is Rs 318 billion more than the Rs 1,804 billion allocated for the outgoing fiscal year 2023-24 ending on June 30.
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