Fiscal year 2019 budget: no CSF inflows Estimated

The federal cabinet has approved proposed broad contours of next fiscal year budget with a 5.3 percent deficit and overall outlay of around Rs5.5 trillion, and revised downward tax and non-tax revenue projections for the current fiscal year. A participant of the meeting told Business Recorder that Prime Minister Shahid Khaqan Abbasi, who chaired the meeting of the federal cabinet, was put forward budget strategy paper for the next three years and stated that no inflows have been estimated from Coalition Support Fund (CSF) in next fiscal year.
The meeting was also informed that debt servicing may face an upward revision for the current fiscal year because of Pak rupee depreciation of around 11 percent in exchange rate since July 1, 2017. A shortfall of Rs70 billion was anticipated in the Federal Board of Revenue tax collection for the current fiscal year in addition to non-tax revenue.
The federal cabinet was informed that cost of debt servicing and repayment of loans has been estimated at Rs1.6 trillion and defence allocation is Rs1.1 trillion, said a member of the cabinet requesting anonymity. He said that these numbers are not final and may undergo a revision before the presentation of the budget. He said the numbers will also be discussed in a meeting with the Prime Minister on Monday.
He said that Rs90 billion will be allocated for TDP and quantum of subsides will be greater for the next fiscal year as opposed to outgoing fiscal year due to increase in production of electricity. The meeting was told that Rs90 billion are expected from GIDC and provinces' share was envisaged at Rs2,550 billion from NFC for the next fiscal year. The fund required for running of civil government has been proposed at Rs444 billion.
Secretary Ministry of Finance presented the Budget Strategy Paper for fiscal year 2018-19 to 2020-21 and briefed about the macro-economic indicators of current fiscal year 2017-18.
The government has projected exports target of US $27.3 billion for the next fiscal year and imports at US $56.5 billion with a trade deficit of US $29.2 billion. The government has estimated 6.2 percent GDP growth for the next fiscal year based on projection of 3.8 percent growth in agriculture sector, 7.6 percent in industry, 8.1 percent in large-scale manufacturing and 6.6 percent in services sector.
Provision estimates for inflation have been projected at 6 percent, investment at 17.2 percent, national savings at 13.3 percent and foreign savings at 3.8 percent. The secretary further stated that budget is based on four broad targets including sustained growth momentum, ensuring fiscal consolidation, managing balance of payments and ensuring debt sustainability.
The cabinet meeting was informed that the recently announced Economic Reforms Package including lowering tax rates, widening tax base, real estate reforms, local amnesty and tightening of foreign exchange regime, will help increase revenues and reduce deficit. The Prime Minister emphasized that sustained income and revenue streams will benefit the country instead of obtaining loans.