Pakistan: Federal Budget For FY25 – Highlights
The Federal Budget was announced on Wednesday with a commitment to continue the fiscal consolidation seen last year. Most of the targets are in line with IMF guideline which will help in getting long term financing facility.
While no major reforms were seen on the exports, energy and other sectors, many tax exemptions have been removed.
Government has adapted significant tax measures to get incremental tax revenues of PKR3.7 trillion, taking total FBR taxes to PKR12.97 trillion from current year estimated number of PKR9.25 trillion.
Including petroleum development levy (PDL) in tax revenues, the FBR tax to GDP ratio for FY25 is estimated to reach 11.5% from 9.62% in FY24. For last five years this has remained 9.7% of GDP. To recall, PDL used to be tax revenue till FY20.
Analysts believe, tax measures taken under this budget are quite balanced and less inflationary than expected, as earlier it was considered that government will increase GST by 1% etc. These measures will pave the way for IMF program, if approved from the parliament.
Overall budget aims to ensure primary surplus of 2% of GDP or PKR2.5 trillion (excluding provincial surplus 1% of GDP), which is in line with the IMF guidelines.
Some of the key announcements from the budget are:
Government has set a GDP growth target of 3.6% for FY25 as against provisional GDP growth of 2.4% for FY24. Government expects Agriculture, Industrial and Services sector to grow by 2.0%, 4.4% and 4.1%, respectively during FY25.
Analysts believe, GDP target of 3.6% is achievable as industries has started reflecting V shaped........
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