Finance Minister Muhammad Aurangzeb presents federal budget 2024-25 amid opposition slogans

This year’s budget, like last year’s, is widely considered to be crafted to align with the International Monetary Fund’s (IMF) requirements to secure another bailout, this time “larger and longer”.

The finance minister thanked Prime Minister Shehbaz Sharif, his elder brother and PML-N leader Nawaz Sharif as well as various other leaders of the coalition government for their guidance in preparing the budget.

“Dear speaker, I think that despite political and economic challenges, our progress on the economic front in the past one year has been impressive,” Aurangzeb said.

He urged Pakistan to capitalise on a fresh opportunity to revitalise its economy.

“Pakistan has another opportunity to improve itself and embark on the path of economic development. I request everyone not to waste this chance,” Aurangzeb said.

The finance minister hailed the government’s efforts to address economic challenges and pledged to accelerate development under the leadership of PM Shehbaz.

“Before presenting the budget, I want to highlight our journey thus far,” the minister said. “Under Prime Minister Shehbaz Sharif’s leadership, we have pursued a homegrown agenda that has enabled us to overcome current economic challenges and boost the pace of development.”

Aurangzeb acknowledged the challenges faced by Pakistan’s economy, which had been struggling with depleted foreign reserves, a 40 per cent depreciation of the rupee, stagnant economic growth, and soaring inflation that pushed citizens below the poverty line.

He commended the government for securing a crucial nine-month IMF programme in June 2023, which helped Pakistan avoid economic collapse.

“The previous IMF programme was ending, and a new deal was essential to prevent a default. I commend Shehbaz Sharif’s government for their efforts in securing the programme,” he said.

Aurangzeb highlighted the significant improvement in economic indicators, crediting the PM and his team for their efforts. “Inflation stood at 11.8pc in May, a notable achievement considering the challenges. We’re on the right track, and inflation is likely to decrease further in the coming days,” he said.

The minister spoke of a significant turnaround in Pakistan’s economy, with foreign exchange reserves bolstered and international investors showing keen interest in investing in the country.

“Pakistan’s foreign exchange reserves have been strengthened, and international investors are now seeking opportunities to invest in our economy,” Aurangzeb said, highlighting the improved economic outlook.

He applauded the State Bank’s decision to cut interest rates, citing visible efforts to combat inflation. “The State Bank’s interest rate cut is a significant move, and the efforts to curb inflation are evident. Shehbaz Sharif and his team deserve congratulations for their commendable efforts to turn the economy around,” Aurangzeb said.

“These achievements are not ordinary. As a result of these, the country has exited a difficult time.”

Earlier, the session commenced with the recitation of the Holy Quran and the national anthem.

Prime Minister Shehbaz Sharif and Deputy Prime Minister Ishaq Dar — Aurangzeb’s predecessor — are attending the session.

Disgruntled PPP

The session started with a nearly two-hours delay after the PPP voiced reservations on the development allocations and PML-N managed to placate them.

PPP lawmakers are now attending the session to complete the required quorum, albeit without party chairman Bilawal Bhutto Zardari. After recitation of the Holy Quran and the national anthem, the presentation is expected to begin.

Earlier, PPP leader Khurshid Shah, speaking to reporters, said the party had reservations with regard to the Public Sector Development Programme (PSDP) budget and that the PPP should have been taken into confidence for the budget.

“It was decided that the PSDP for the four provinces would be decided together,” he said while speaking to the media.

“We are in the same boat. If something goes wrong, it would be not just for the PML-N, but for us as well [as allies],” the PPP leader said, adding that the decision to not take part in the speech was to protect their party.

He stated that if his party were taken into confidence then they can have dialogue.

Following a PPP parliamentary party meeting, PPP MNA Shazia Marri told reporters that: “We had two party meetings, one yesterday and another today, to discuss our concerns and recommendations, but they were not addressed.

PPP leaders during a parliamentary party meeting ahead of the budget on Wednesday.

“Our members have protested the violation of our agreement on PSDP, and we have received no response to our legitimate concerns.”

Following the airing of these concerns, Deputy Prime Minister and PML-N leader Ishaq Dar met PPP Chairman Bilawal Bhutto Zardari in his chambers. Shortly afterward, Dar told reporters that the nation would receive “good news [in this regard soon”.

Furthermore, party leaders Naveed Qamar nodded in affirmation when asked by reporters whether the party would join the session.

A meeting of the federal cabinet took place to approve the budget. Soon after the government released a photograph of Prime Minister Shehbaz Sharif signing the budget after it was approved.

Prime Minister Shehbaz Sharif signs the documents of the federal budget 2024-25 after its approval from the federal cabinet to be laid before the National Assembly on 12 June 2024.The finance minister will then lay a copy of the Finance Bill 2024 before the Senate, which is expected to convene at 6pm.

As per the government’s tentative plan, a general debate on the budget would start on June 20 and would continue till June 24. The members will take part in the debate and voting on cut motions on June 26 and 27 whereas the budget will be passed on June 28.

A day earlier, the government unveiled the Pakistan Economic Survey 2023-24, which showed that the economy failed to meet most of its targets set in the previous budget due to challenging conditions. The agriculture sector, however, achieved unprecedented growth.

But the comments made by the finance minister yesterday hinted at a renewed focus on taxing untaxed

On Monday, the National Economic Council (NEC) — comprising Prime Minister Shehbaz Sharif, Deputy PM Ishaq Dar, the four chief ministers and the defence, finance, and planning ministers — approved a Rs3.792 trillion federal Public Sector Development Programme — more than 47pc increase compared to the previous FY.

Last week, it was reported that the finance ministry and the IMF were locked in last-minute talks ahead of the budget as the global lender put forward some tough conditions.

The IMF’s key demands include an increase in the tax revenue target, withdrawal of subsidies, taxes on the agriculture sector, increase in levy and taxes on power, gas and oil sectors, privatisation of sick government organisations and units and improving administration, a ministry official said.

Meanwhile, economist Sakib Sherani said the budget would be in line with IMF requirements but cautioned, “However, the real problem will be adherence to fiscal austerity and prudence and containment of populism.”

Ahead of the budget presentation, PM Shehbaz also chaired a meeting on the “rightsizing of the government”, the government’s official X account stated.

According to state broadcaster PTV News, a committee constituted for the purpose presented a preliminary report before the premier.

The report, containing short-term and mid-term recommendations, proposed shutting down a few state-owned enterprises, merging several others and handing some to the provinces, PTV News reported.

The committee further recommended that all such posts vacant for more than a year be abolished and that government officials’ “unnecessary travel” be prohibited while teleconferencing be encouraged.

Subsequently, the prime minister formed a high-powered committee to furnish a comprehensive report within 10 weeks on the said proposals.

Agriculture only saving grace in otherwise dismal year

According to the PES, the strong 6.25 per cent expansion in the agriculture sector — said by the report to be the highest in 19 years — drove Pakistan’s GDP growth by an expected 2.38pc in FY2024, recovering from a contraction of 0.21pc in the previous year.

The report said fiscal discipline was maintained, with a fiscal deficit of 3.7pc of GDP and a primary surplus of 1.5pc of GDP. Total revenues, meanwhile, grew by 41pc, driven by non-tax revenues and improved tax collection.

The State Bank of Pakistan, meanwhile, kept a tight monetary policy, with a 22pc policy rate, helping to ease inflation to 26pc from 28.2pc last year.

The current account deficit narrowed by 87.5pc to $0.5 billion compared to $4.1bn last year, and gross foreign exchange reserves increased to $8.0bn.

However, the PES noted a decline in the investment-to-GDP ratio, sluggish large-scale manufacturing, and high public debt.

It further revealed that cash-strapped Pakistan witnessed the highest-ever single-year increase in tax exemptions or concessions, surging by 73.24pc compared to the previous year to dole out a record Rs3.879tr.

During the presentation, Aurangzeb hinted at letting “no sacred cow” escape without paying due taxes through the budget for FY2024-25. He expressed confidence in beginning the next fiscal year on a stronger note, backed by the IMF’s support.

Speaking less on the performance of each economic sector and their sub-sectors, the finance minister stressed focusing on reforming the revenue system, energy sector, and state-owned enterprises (SOEs), reiterating that there were no strategic SOEs.