1. Once again, as I have the honour
of presenting the Budget 2015-16, I bow my head before Allah Almighty for untold
and immeasurable blessings He has bestowed on this nation and the singular distinction
He has conferred on Mohammad Nawaz Sharif, Prime Minister of Pakistan and his Government
in restoring the health of a broken economy. The economic performance we have rendered
in two years is unparalleled in the history of democratic governments. This has
been made possible by the design of sound economic policies, first announced in
PML (N) Manifesto for Elections 2013 and then incorporated and implemented in the
Budget 2013-14 and since then faithfully and steadfastly observed and followed by
2. This august House is well aware
that when we took office, the most vicious rumour taking rounds in the local and
international financial circles was the imminent default that Pakistan was set to
make in June 2014. This was a clever guess based as it was on the level of available
reserves and the payments falling due until that date. In the backdrop of completely
dried-up foreign flows, as IFIs had declined to work with Pakistan, the reserves
were destined only to travel south. However, we were determined to prove these economic
pundits wrong and the country saw that not only we proved them utterly wrong but
have steered the economy of Pakistan to safer shores.
3. In June 2013 we had a clear road-map
of three objectives:
(a) Preventing Pakistan from default
(b) Achieving macroeconomic stability
by June 2015; and,
(c) Promoting inclusive economic
growth for creation of job opportunities and providing resources to alleviate poverty
from 3rd year onward.
4. We formulated policies and programs
to achieve these objectives and we never hesitated in taking difficult decisions,
no matter how unpopular, so long as they were critical for the revival of the economy.
Accordingly, the economy of Pakistan has been stabilized and poised to grow at an
Review of Economic Performance
5. I would like to place before this
august House the following key economic indicators, based largely on 9 or 10 months
data for the current fiscal year:
(a) Economic Growth during 2014-15
has been provisionally recorded at 4.24% compared to the revised estimate of 4.03%
last year, showing a rising growth trajectory. During 2008-13, the growth rate had
averaged around 3% and hence this is the highest growth rate in seven years. The
growth target for the year was 5.1%, which could not be achieved for the following
> Massive floods in September
> Economic disruption during August-December
2014 due political agitation;
> The massive decline in international
commodity prices, particularly oil affecting the output of these and associated
> The unusually long and cold
winter weather had a negative impact on the Rabi crops, including wheat;
> The output of large-scale manufacturing
has been affected due to shortages in gas and electricity, despite improvements
in their supplies.
> Credit to private sector has
grown at a slower pace as commercial banks continued to lend to the Government.
(b) Per Capita Income, which stood
at $1384 last year has increased to increase to $1512, showing a growth of 9.3%;
(c) Inflation, which had averaged
around 12% during 2008-13 before our government, was recorded at 4.6% for Jul-May
2014-15, which is lowest in 11 years;
(d) FBR Revenues, which had registered
only 3% growth in 2012-13, were up by 16.4% during 2013-14 and have risen by another
nearly 13% in the first 11 months of 2014-15 and are expected to close at 15% increase;
(e) Fiscal Deficit, in June 2013
was at 8.8%, which was brought down to 8.2% within weeks. In. 2013-14, this was
brought down to 5.5% of GDP. In the current fiscal year we are on course to achieve
the target of 5%;
(f) Credit to Private Sector, grew
by 11% during 2013-14. It is projected to further grow at 7% during the year. The
share of fixed investment in credit has significantly increased compared to last
(g) Policy Rate of SBP was 10% in
November 2013, which has now been cut to 7% during the current fiscal year. This
is the lowest policy rate in decades. The commercial lending rates are determined
by the policy rate and have been declining in line with the policy rate. It will
help spur investment, as the cost of capital will decline significantly;
(h) Exports were $20.18 billion during
Jul-Apr 2014-15 compared to $20.83 billion last year, showing a decline of 3%%,
largely due to negative price effect in the global commodity markets. Even though
we have exported larger quantities but because of lower international prices, we
have realized lower values;
(i) Imports were recorded at $34.65
billion during Jul-Apr 2013-14 compared to $34.09 billion for same period in the
current year, showing a marginal decline of 1.61%. More notably, imports of machinery
have increased by an impressive 10.3% an indication of rising investment in the
(j) Remittances were recorded at
$12.89 billion during Jul-Apr 2013-14, rose to $14.97 billion for the same period
this year, showing an increase of 16.14%, which is remarkable and for which I once
again salute my expatriate Pakistanis for playing such a critical role in country’s
(k) Exchange Rate has shown remarkable
stability in the last more than a year, except for a brief period during August-September
due to political instability. Presently, the rate is hovering around Rs.102/$ in
the inter-bank market. For an economy like Pakistan, Exchange Rate has a pivotal
position, as it impacts pervasively on all other variables. Accordingly, a
competitive and market determined stable exchange rate reduces uncertainty and boosts
confidence of investors and consumers alike. The exchange rate stability we have
achieved has not been witnessed in recent years and is source of rebuilding the
credibility of our economy;
(l) Foreign Exchange Reserves were
in a precarious state in June 2013. The State Bank reserves were at $6 billion,
of which $2 billion were due to a swap that was payable in August and nearly $3.2
billion were falling due for repayments to IMF during the year, bulk of which in
the first half. On 10th February 2014, SBP’s reserves had further declined to $2.7
billion. Resultantly, the overall reserves, including those held by commercial banks,
were $7.7 billion. It looked as if the notorious rumors were finally becoming reality.
However, Alhamdulillah, we have strengthened the economy against fluctuations in
external markets. Today country’s foreign exchange reserves have climbed to about
$17 billion, of which the SBP reserves are around $12 billion, showing that all
the increase in reserves has come in SBP reserves. We are poised to take the reserves
level to a historic high of nearly $19.0 billion during the year.
(m) Karachi Stock Exchange (KSE)
Index stood at 19,916 on 11 May 2013, the day the elections, has now surged to around
34,000, showing an increase of 70%. Also, this increase meant an increase of about
40% in market capitalization.
(n) Incorporation of New Companies
was recorded at 3664 during Jul-Apr last year while during the period in 2014-15,
this number has increased to 4100, showing an increase of 11.9%;
6. In addition to above, we have
accomplished a number of other successes in different areas, some of which are noted
(a) International Sukuk: We entered
the international Sukuk market, after 8 years, in November 2014, by issuing a five
year Sukuk aiming to raise $500 million, but we received $2.3 billion, nearly five
times the subscription and decided to take $1 billion. The proceeds of Euro
Bonds and Sukuk have gone to retire an equivalent amount of domestic debt in the
SBP and hence there is no increase in Public Debt due to this borrowing.
(b) Eligibility for IBRD: In the
last budget I had informed this House about the resumption of policy lending from
the World Bank and Asian Development Bank, which was suspended for lack of a stable
macroeconomic framework before June 2013. After achieving macroeconomic stability
and the requisite increase in foreign reserves, in February 2015, Pakistan is declared
eligible again for IBRD facilities.
7. The above review of economic indicators
and policy initiatives fully demonstrates the fact that the country has achieved
macroeconomic stability. It clearly shows an economy that is moving in the right
direction. The expert assessments I will be citing shortly are reflective of the
rising confidence of our development partners as well as investors. Pakistan is
offering such investment opportunities, which few countries in the region can match.
Accordingly, as we enter the third year we are confident that the year would bring
even better economic results.
8. The picture painted above is not
based exclusively on our own views. The international analysts and observers are
all praise for our performance and potential for future growth. Some of these are
worth bringing to the knowledge of this august House:
Japan External Trade Organization
(JETRO) has declared Pakistan as likely to be second choicest place for FDI;
Goldman Sach’s Jim O’Neill has forecast
that Pakistan would be world’s 18th largest economy by 2050 from its present 44th
Overseas Investors’ Chamber of Commerce
and Industry (OICCI) has found that Business Confidence Index amongst its members,
which stood at -34 has climbed to as high as +18;
Moody’s and Standard and Poor’s have
both improved Pakistan’s outlook from negative to stable and recently from stable
Nielsen’s Global Survey of Consumer
Confidence rose to 99 in the 1st quarter of 2014 from the lowest level of 86 in
3rd quarter of 2011;
David Darst, Chief Investment Strategist,
Morgan Stanley, has said ‘Pakistan is set to take-off, it is a matter of time’;
Bloomberg News says that despite
challenges (a) corporate earnings in Pakistan are soaring and (b) stocks have surged.
The Economist London in its 2nd May
2015 issue has praised Pakistan’s economic recovery;
World Trade Organization (WTO) Trade
Policy Review, April 2015 has praised economic performance of Pakistan;
Financial Action Task Force (FATF),
the international body for monitoring anti-money laundering and terrorist financing
had included Pakistan in its “Grey List” in 2012. After Government’s actions including
changes in laws, Pakistan has been included in the “White List” in February 2015.
9. The goals we have set are our
guide in the economic journey.
Our actions have been guided by these
goals. The brief description of our performance, given above, and what will be highlighted
later in this speech, exemplifies the faithfulness and seriousness with which we
are working to realize this vision. A democratic government is answerable to Parliament
and people and it would be held accountable on its promises made to both of them.
While moving on to the third year of our Government, we continue to remain faithful
to this vision and the third budget will fully reflect its application in our proposals.
Main Elements of Budget Strategy
10. The main elements of our budget
strategy are as follows:
(1) Reduction of fiscal deficit:
We will continue to consolidate the gains we have made in reducing fiscal deficit.
In 2015-16 we will target a deficit to 4.3% compared to 5% in 2014-15;
(2) Raising Tax Revenues: Part-II
of the speech will deal with tax proposals. At this stage, however, I would say
that the proposed reduction in deficit will be achieved through a combination of
better tax collection and tight expenditure controls;
(3) Continued Focus on Energy: Energy
is one of our key priorities. This can be judged by the fact that the Prime Minister
is devoting considerable type to oversee developments in the sector. A Cabinet
Committee on Energy has been constituted, which is headed by the Prime Minister
himself. Keeping in view the current gap in demand-supply of power in the face of
high GDP target, we plan to bring 7000 MW on stream besides setting up 3600 MW LNG-based
projects. By December 2017, we will bring 10600 MW in the system. Beyond December
2017, other projects such as Dasu, Diamer-Bhasha, Karachi Civil Nuclear Energy and
many other projects will also be completed.
(4) Exports Promotion: In this budget,
we would be announcing additional measures to incentivize exports and taking other
measures to ease the cost of doing business and improving the overall regulatory
regime to facilitate exporters.
(5) Investment to GDP Ratio: The
Investment-to-GDP ratio, which was registered at 12.4% during 2012-13, improved
to 13.4% during 2013-14 and is provisionally estimated at 13.5% for the current
fiscal year. The combined effect of increased public sector investments has also
played a role in reversing the declining trend. We are projecting this ratio
to rise to 16.5% during 2015-16.
(6) Public Debt Management: Debt
management has received special attention in our overall efforts for fiscal management.
The fiscal consolidation we have achieved has paved the way for a reduction in public
debt, which fell from 63.9% in 2012-13 to a now projected level of 62.9% at the
close of current fiscal year. In the next three years, Debt to GDP ratio will be
brought down to less than 60% in accordance with the provisions of the Fiscal Responsibility
and Debt Limitation (FRDL) Act, 2005, InshaAllah.
(7) Benazir Income Support Program
(BISP): This program is an effort to provide relief to the poor and vulnerable people
of society as a matter of our responsibility and their right. The following have
been the main achievements in this program:
i. From Rs.40 billion in June 2013,
we have increased the size of the program to Rs.97 billion during the current year.
We are further enhancing this allocation to Rs.102 billion, representing more than
155% increase since 2012-13;
ii. Until 2012-13, the cash transfer
program was covering 4.1 million families, which would be taken to 5.0 million during
the current year. By end of next financial year the number of beneficiary families
would increase to 5.3 million, showing an increase of 29% since 2012-13;
Besides the above program, we are
providing an additional Rs.2 billion to Bait-ul-Maal for supporting its welfare
activities, notably the hospitalization costs for the vulnerable people. The allocation
has been increased by to Rs.4 billion for 2015-16, which is 100% increase.
(8) Development & Promotion of
ICT Sector:- A number of initiatives were announced in the last budget for the development
of promotion Information and Communication Technology (ICT). These initiatives have
been operationalized with the following key features:
> Universal e-telecasters: A project
for Universal e-telecasters with an investment of Rs.12.0 billion has been approved.
In the first phase 500 telecentres would be established in all provinces including
FATA. For this purpose, 217 land sites across Pakistan have been selected. Program
is at advance stage of implementation and would soon be rolled out.
> Improved Connectivity for Remote
Areas: For connectivity of remote area the Government has decided to invest Rs.2.8
billion laying optic fiber cables. Work on this program is going on at fast track
basis. In consultation with Provincial Governments 128 tehsils and towns have been
identified nationwide, which do not have optic fiber connectivity. Rural telecommunication
is another program, which envisages investing Rs.3.6 billion on connectivity of
rural un-served areas with the rest of country.
Rationalization of International Clearing House (ICH): In October 2012, a new policy
for International Clearing House (ICH) was initiated. There have been several problems
with the policy as it resulted in losses to users and increase in grey traffic.
Since government intends to provide relief to people, therefore, we have reformed
this policy and rationalized the rates of international calls. This is benefiting
expatriate Pakistanis and promoting legal traffic, which has increased from 367
million minutes per month in November 2014 to 1,100 million minutes per month by
now – a three fold increase.
> Prime Minister’s National ICT
Scholarship Program: As announced in the last budget, 500 IT scholarships with a
total cost of Rs.125 million will be provided to the talented students from rural/non-metropolitan
areas. The program provides fully funded 4 years undergraduate degree scholarships
in ICT related disciplines in the leading ICT universities of Pakistan. Under the
program 480 students availed the scholarship by joining in 21 top Pakistani universities.
The program will be continued in the future.
Medium-term macroeconomic framework
11. As always, our budget strategy
is embedded in a three year medium term macroeconomic framework spanning the period
2015-16 to 2017-18, the main features of which are as follows:
(a) GDP growth to gradually rise
to 7% by FY 2017-18.
(b) Inflation will be contained to
(c) Investment to GDP ratio will
rise to 20% at the end of medium term;
(d) Fiscal deficit would be brought
to down to 3.5% of GDP;
(e) Tax to GDP ratio will be increased
(f) Foreign exchange reserves would
be maintained above $20 billion, inshaAllah;
12. In view of the performance we
have registered in the first two years in office, we are confident to achieve the
goals set out in the medium-term framework. We have no doubt that we would remain
on course while pursuing the above framework.
14. The current Five Year Plan 2013-18
is a comprehensive roadmap and sets timelines for achieving high growth rate. The
outlook for 2015-16 is positive with a significant recovery in growth momentum.
The growth of GDP for 2015-16 is targeted at 5.5% and gradually steering it to over
7 per cent by 2017-18. In order to achieve the targeted growth rate of 5.5 per cent,
the sectoral contributions are agriculture (3.9%), industry (6.4%) and services
15. The plan is geared towards developing
human and social capital of the country by enabling universal access to education
and health facilities, empowering women and eradicating poverty; thereby capitalizing
the demographic dividend and increasing the total factor productivity.
16. Strategies have been devised
to encourage public-private partnerships in the development process. Transport,
communications, financial, industrial, and services sectors have been identified
as important areas with high growth potential. Consequently, comprehensive action
plans have been outlined to improve growth rates for these sectors and increase
their respective contributions to the GDP.
17. National Development Program
of worth Rs.1,513 billion is being earmarked for 2015-16. The development program
2015-16 includes Rs.700 billion as federal PSDP. In addition to increasing the public
Investment, concerted efforts are being made to entice the private investment through
a variety of mechanisms such as promoting public private partnerships, FDI, creating
special economic zones with fiscal incentives.
18. These measures are expected to
boost economic growth for key sectors and increase their respective contributions
to the GDP.
19. I would now present some highlights
of the development budget, focusing mainly on the sectors that will contribute most
to economic development.
20. The most important sub-sector
claiming resources in our development plan is the water sector, where we are investing
Rs.31 billion for projects in various parts of the country. A project that will
be the future lifeline of Pakistan is the Diamir Bhasha Dam, which will store 4.7
MAF of water and generate electricity of 4500 MW. We have provided Rs.15 billion
for land acquisition during the year and have kept a provision of Rs.6 billion for
construction of lot 1 out of 3. In addition, another important hydropower project
is Dasu, which will have the capacity to generate 2160 MW. We are committed
to make these two dams a reality and preparatory works has already started.
21. Water projects in Baluchistan
are the second most important focus of water sector investments comprising construction
of delay action dams, flood dispersal structures, canals and small storage dams.
Main focus will be on the existing projects that can be completed within the next
1 – 2 years. In this regards, work is in advanced stages on projects such as Kachhi
Canal (DeraBugti and Nasirabad), Naulong Storage Dam (JhalMagsi), extension of Pat
Feeder Canal to DeraBugti and ShadiKaur Dam (Gawadar). Besides these large projects,
we will also invest in building small dams in the province. This year we will start
work on Basool Dam in Gawadar.
22. Similarly, in Sindh, projects
that are advancing gradually are Rainee Canal (Ghotki and Sukkur), extension of
Right Bank Outfall Drain from Sehwan to sea, and Darwat Dam.
In addition, this year we will start
the work on MakhiFarash Link Canal project. In Punjab work on channelization of
NullahDeg and Ghabir Dam (Chakwal) will commence.
In Khyber-Pakhtunkhwa, other than
Dasu, funds will be provided for Keyal Khawar hydropower project, and other small
dams. In FATA funding for Kurram Tangi in North Waziristan, and Gomal Zam
Dam in South Waziristan will continue.
23. Besides, numerous schemes of
lining of water-courses will be undertaken in Khyber-Pakhtunkhwa, Sindh and Punjab
to reduce water wastage together with flood protection and drainage schemes all
over the country.
24. I have already stated the focus
we have on the energy sector.
We have taken a number of steps to
address structural problems of the sector including reduction in system losses,
improvement in recoveries, elimination of theft and settlement of inter corporate
circular debt. However, our real focus is on developing additional resources of
energy so as to permanently overcome energy shortages.
25. As in the past, we have allocated
the largest amount of resources to add new and economical capacity in the country.
During the current year a sum of Rs.248 billion will be invested in this sector
up from Rs.200 billion allocated in last year’s budget. Of this, Rs.73 billion will
come from the PSDP. The government is aiming to almost end load shedding by December
26. Large projects that are part
of this year’s allocation are:
> Rs52 billion have been allocated
for Stage 1 of Dasu Hydro Power Project which will produce 2160 MW of power;
> Rs21 billion have been allocated
for land acquisition and construction of Lot 1-5 for Diamir-Bhasha Dam and Hydropower
Project having a reservoir of 8 MAF and 4500 MW of power;
> Rs11 billion have been allocated
for Neelum Jhelum Hydro Power Project having a capacity of 969 MW;
> Rs11 billion have been allocated
for completion of Tarbela-IV Extension Hydro Power Project with a capacity of 1410
> Rs5 billion have been allocated
for Up-gradation of Guddu Power Project having a capacity of 747 MW of highly economical
27. In addition a number of
other projects such as two Karachi
> Nuclear Coastal Power Projects
(2200 MW) with Chinese assistance;
> Chashma Civil Nuclear Power
project (600 MW); Golan Gol Hydro Power
> Project (106 MW); Evacuation
of power from wind power projects at
> Jhimpir and Gharo Wind Clusters;
Interconnection of Chashma Nuclear Power Plants III and IV
28. This year we will start work
on new important projects such as:
> Interconnection scheme for import
of power from CASA-1000
> Evacuation of power from 2160MW
Dasu HPP Stage-I
> Evacuation of power from 1320MW
Power Plant at Bin Qasim
> Alliot switching station and
its interconnection with SukiKinari HPP
29. Addition of a number of hydel
projects, coal based plants, wind energy and nuclear projects will correct the energy
mix to provide cheap electricity to the people of Pakistan while improvement of
the transmission and distribution system will reduce the system losses. The drive
against energy theft will further reduce the burden on the common man.
30. Pakistan’s location is such that
it can play a central role in regional connectivity. In order to maximally exploit
the natural advantage of its geography and to translate it into economic gains,
there is an imperative need to invest in communication infrastructure. Accordingly,
we have allocated Rs.185 billion for construction of roads, highways and bridges,
compared to last year allocation of Rs.112 billion, which is an increase of 65%.
31. An area of our priority in the
highways sector is the completion of Lahore-Karachi Motorway. We firmly believe
that this 1152 Kilometres long highway will change the fate of this country.
It will provide jobs, farm-to-road connectivity and economic growth in Pakistan.
In the Budget 2015-16, we have allocated Rs.20 billion for Lahore-Abdul Hakeem
Section which is about 230 kilometers long. Similarly, an allocation of Rs.61
billion has been allocated for Multan-Sukkar Section (387 kilometers), whereas in
order to complete the Sukkur-Hyderabad Section (296 kilometers), a provision of
Rs.10.5 billion has been made in the PSDP.
32. Apart from completion of various
segments of Karachi-Lahore Motorway, we have made allocations to start work on other
section of China Pakistan Economic Corridor. In order to acquire land and undertake
technical studies of Islamabad-Dera Ismail Khan Route, we have made provision of
Rs.10 billion in this budget. Furthermore, we plan to start Thakot-Havelian link,
which is the priority section of Raikot-Islamabad KKH Phase II project for which
we have allocated Rs.29.5 billion.
33. We have earmarked resources for
numerous projects in Highways sector in this budget. Some of them are: Gwadar-Turbat-HoshabSection
of Gwadar-Ratodero Roadwhich is 200 kilometers long, Widening and improvement
of N-85 Hoshab-Nag-Basima-Surab Section, Construction of Faisalabad-Khanewal
Expressway, LowariTunnel and Access Roads in Dir etc.
34. In addition to above, as a gift
to the people of Karachi, we are establishing a world class bus transit system namely
Green Line Bus Transit System which will operate between Saddar and Surjani Town
and will be able to commute 300,000 passengers per day. This project is planned
to be completed by December, 2016 with a total cost of about Rs.16 billion.
35. Islamabad-Lahore Motorway (M2)
was a path-breaking project of Pakistan Muslim League (N) government which revolutionized
road-travel in Pakistan. Such highways require re-surfacing after every 8-10 years.
However M2 has not received re-surfacing in last 18 years. Under the directions
of the Prime Minister Muhammad Nawaz Sharif, the government has undertaken the initiative
of M2 re-surfacing with financing from private sector.
36. Railway is supposed to provide
cheaper, faster and convenient mode of passenger and freight transport. Accordingly,
its development is one of our important priorities.
37. Newly launched Green Line train
express between Islamabad and Karachi is the result of efforts of the Railways Ministry.
However, this is the beginning of a bright future. Pakistan Railways will target
its investments around locomotives, bogies, tracks, signaling systems, and improvement
of existing railway stations.
38. For the current year’s budget
the following projects will be our key priority:
> Work on doubling of track from
Khanewal to Raiwind, and from Shahdara to Lalamusa will be completed during
FY 2015-16. Both of these tracks will cover major portion of the north-south mainline.
In coming years Pakistan Railways will aim to double the remaining tracks. In addition,
we hope to complete the rehabilitation of track from Karachi to Khanpur. Work on
track rehabilitation on Khanpur-Lodhran section will continue.
> I am also happy to state that
strengthening and rehabilitation of 159 weak railway bridges will be completed by
> Pakistan Railways faces shortage
of locomotives and rolling stock have been made in the current as well as next year’s
budget. Allocations have been made in the current budget to add 170 engines
to the system through procurement while 100 old engines will be repaired for use.
> Similarly around 1500 new wagons/bogeys
are also being arranged. Pakistan Railways is taking these steps to improve the
travelling experience of its customers. In order to further enhance the convenience
of travelling with Pakistan Railways, this budget has allocated special amounts
to renovate and upgrade railway stations in various cities.
> From this year we plan to start
working on an important project that will lead to improvement of signaling system
on Lodhran-Khanpur-Kotri Section and provision of centralized traffic control.
> Allocations have been made in
this budget to procure additional wagons for freight operations and a feasibility
study is being commissioned to study the possibility of a dedicated freight corridor.
39. In this budget, we have allocated
Rs78 billion, of which Rs41 billion are in PSDP for 52 development schemes and Rs37
billion for pay & pensions of railway employees. Private and international investments
are expected during the course of the financial year in this sector, as well.
40. People are the most precious
resources of any nation.
Therefore we consider the expenditures
on human development as investments as they lay the foundation of future growth
at an accelerated pace.
41. Initiatives that will be undertaken
for the promotion of this sector are as follows:
> A sizeable allocation of Rs.20.5
billion has been made for 143 projects of the Higher Education Commission, which
will support development plans of different universities all over the country. It
may be noted that on the current side also a hefty allocation of Rs.51 billion is
made for HEC. Thus a combined outlay of Rs.71.5 billion will be made for higher
education. The combined allocation represents about 14% increase, which is sizeable
considering the tight fiscal conditions prevailing in the country.
Health sector service delivery has
been fully devolved to the provincial governments. As per the decision taken by
the Council of Common Interests in 2010, the Federal Government continued to support
the provincial Governments till this year for the national health and population
welfare programs. From the next fiscal year, we expect the provinces to fund for
these initiatives. However, the Federal Government will continue to lend technical
support to the provincial Governments in execution of important national programs.
We had announced first in the PML
(N) Manifesto and reiterated by the Prime Minister our resolve to increase the expenditure
on education as percentage of GDP to 4% during our tenure. We continue to remain
committed to this goal. However, it should be noted that a major share of education
expenditure is the responsibility of the provinces. The share of federal government
in this expenditure is only 20%. Moving from the present level of 1.67% of GDP to
4.0% of GDP will require the federal government to increase its spending from 0.34%
of GDP to 0.80% and the provinces to increase from 1.33% of GDP to 3.20%.
The federal government will fulfill
its commitment and after the recent discussion in the National Economic Council
(NEC) Meeting, I am confident that the provinces will come forward and fulfill their
TDPs and Security Enhancement:
Special Development Program
42. Our country has rendered enormous
sacrifices in both blood and treasure in fighting terrorism. Yet this is a menace
that requires a long-term effort to eradicate. The operation Zarb-e-Azb had been
initiated with a steely resolve to uproot this peril for good, and our Armed Forces
have fought valiantly and accomplished exemplary successes, for which they deserve
the gratitude of every Pakistani. However, the atrocities committed by retreating
and desperate remnants elements in Peshawar and Karachi are a reminder that we cannot
be complacent in this war.
43. These events have established
the need for further reinforcement in country’s internal defenses with objectives
of protecting the areas from where the terrorists have been evicted, rehabilitating
the displaced persons allowing them to honorably restart their lives. To cater for
these needs Government is undertaking a Special Development Program of Rs.100 billion
to enhance the security apparatus and rehabilitate the affected areas and resettle
the temporarily displaced persons (TDPs).
MDGs Community Development Program
44. With a view to promote achievement
of MDGs, and in the larger national interest of diffusing development works at the
local level, the Government has initiated a development program for undertaking
small development schemes in the fields of health, education, small roads linking
farms to markets, spurs and small dams, being selected and implemented by the provincial
governments with the participation of community representatives. For this program
Rs.20 billion have been allocated in the 2015-16 budget.
China-Pak Economic Corridor
45. China-Pak Economic Corridor is
the vision of the Prime Minister Nawaz Sharif top Chinese leadership for reviving
and rebuilding the historical connectivity between China and Pakistan and to eventually
enable extended connectivity to central and West Asia. Kashgar-Gawadar linkage will
not only enhance trade but will also act as an energy corridor. We are proud of
this flagship project that will transform Pakistan’s economy.
46. Pakistan and China have jointly
signed projects worth about $46 billion that include building of roads and rail
networks and telecommunications, development of Gwadar Port and major projects for
additional power and improvement in power transmission sub-sector.
47. Some of the key projects proposed
to be undertaken under the CPEC program are as follows:
> 2 x 660 MW Coal-Based Power
Projects (IPP) at Port Qasim;
> Power Evacuation from Mitiari
to National Grid (IPP);
> 3.5 MT/A Coal Mining and 2×330
MW Power Plants based on Thar Block-II SECMC;
> Solar Power Park at Bahawalpur;
> 2793 MW (Three) Hydro Power
> Multan-Sukkur section (387Km)
of Karachi-Lahore Motorway;
> Karakoram Highway (Phase-II)
Raikot to Islamabad;
> Fiber Optic;
> Rehabilitation & Up-gradation
of Karachi-Lahore-Peshawar (ML-
1) Railway Track;
2) Gawadar Package;
3) East Bay Expressway at Gawadar
4) Jhimpir Wind-Power 200 MW;
5) 2 x 660 MW Coal-Based Power Projects
6) Jetty + Infrastructure at Gaddani
as IPP (preferably) or Public Sector;
48. The government is determined
to fulfill the necessary financial requirements of CPEC Projects.
Development of Gwadar
49. Keeping in view the significant
role Gwadar has to play for strengthening the economy of Pakistan in the coming
days, the government takes the development of this area very seriously.
Accordingly, we are allocating significant
resources for a host of development projects aimed at uplift of this area. Some
of them are:-
a. Rs.3 billion are being allocated
in 2015-16 for New Gwadar International Airport
b. A provision of Rs.2 billion has
been made for Gwadar Development Authority in next budget, and
c. For necessary facilities of water
treatment, supply its distribution in Gwadar, we are making a substantial allocation
of Rs3 billion.
Status of Initiatives in the Budget
49. Before I announce the new initiatives
in the Budget 2015-16, I find it necessary that I bring to this House’s attention
the status of initiatives I had announced in the last budget.
In the Budget 2014-15, the government
had announced to undertake a number of new initiatives aimed at strengthening various
sectors including textiles industry, exports, agriculture, health, telecommunication,
taxation and social safety nets. Such initiatives included the establishment of
various new organizations e.g. Land Port Authority (LPA), Mortgage Refinance Company
(MRC), National Food Security Council (NFSC) etc.
Furthermore, a number of new schemes
were announced to be launched including Credit Guarantee Scheme for Small and Marginalized
Farmers, Reimbursement of Crop Loan Insurance Scheme and introduction of Health
Insurance System etc.
Being fully cognizant of the significance
of these well-designed initiatives, we have strived hard for their implementation
over the last year and I am proud to announce that despite the resources constraints
and the gigantic economic challenges, out of total 34 new initiatives announced
in the previous budget, 20 have been fully implemented while the work on the remaining
Special Initiatives for 2015-16
50. Pakistan is poised to grow at
an accelerating pace. At this stage of transition we need to consolidate recent
gains, hasten the process of reforms and take required measures to enable some of
those sectors that have not performed as per expectations. In this section I will
confine to the last of these objectives as I have already dealt with the other two.
I now outline some of the measures we propose in the budget for enabling those sectors
to perform to their potential.
51. I have already noted somewhat
weak performance of the exports during the year. The main reason behind this is
the major decline in global commodity prices, particularly those of cotton and rice.
Even though a small country cannot affect global prices, we need to look at some
of the irritants that may be impeding our exports competitiveness. The following
measures are being adopted for promotion of exports:
(1) EXIM Bank of Pakistan (Specialized
DFI) will be helpful in enhancing export credit and reducing cost of borrowing for
exporting sectors on long term basis and help reduce their risks through export
credit guarantees and insurance facilities. The Bank will start operations in 2015-16.
(2) Exports Refinance Facility (ERF):
In the last budget, the Government, through the State Bank of Pakistan, had arranged
to reduce its mark-up rate on exports finance from 9.4% to 7.5%, This rate was reduced
in February 2015 to 6.0%, and it will be further brought down to 4.5% from 1st July
(3) Long Term Finance Facility: In
the last budget, the Government, through the State Bank of Pakistan had arranged
to reduce its mark-up rate on long term financing facility for 3-10 years duration
from around 11.4% to 9.0% to allow export sector industries to make investments
on competitive basis. This was further reduced to 7.5% in February 2015 and will
be further brought down to 6.0%;
(4) Removing Anti-exports bias in
Imports: A series of measures being announced in this Budget relating to rationalization
of tariff and taxes having bearing on the export industries will gradually remove
the anti-export bias in country’s tariff policy and make exports more competitive.
(5) Export Development Initiatives:
Ministry of Commerce is formulating initiatives for (a) production diversification,
(b) value addition, © trade facilitation, (d) enhanced market access and (e) institutional
strengthening. An allocation of Rs.6 billion has been made to support initiatives.
The Export Development Fund (EDF) Board has been reconstituted to also support this
(6) Establishment of Pakistan Land
Port Authority: The initiative for establishing the Land Port Authority of Pakistan
was announced in the last budget. We have completed the requisite formalities for
its formal launching. In the meanwhile we have invested Rs.352 million for the establishment
of infrastructure at the Torkham Border to enable it to operate under the conditions
of a modern port environment.
52. Textiles Industry is the mainstay
of Pakistan’s economy. It accounts for more than 50% of our exports value and is
the single largest employment provider in the manufacturing sector. It has a very
long production chain from cotton picking to ginning, spinning, weaving, knitting,
processing and stitching, whereupon considerable value-addition is done at each
step. In recognition of its significance, the government had announced a special
package for Textiles Sector in the Budget 2014-15.
The following facilities announced
in the package shall remain available for the textile sector during the FY 2015-16:-
(1) Under Textiles Policy 2014-19
financial package of Rs.64.15 billion has been approved in order to double the textiles
exports and create 3 million additional jobs by the year 2019.
(2) To resolve the various issues
pertaining to textile sector and for implementation of Textiles Policy 2014-19,
the government has restructured the Federal Textile Board with majority members
from the private sector.
(3) The benefit of Drawback of Local
Taxes & Levies Scheme shall remain available for the textile exporter in the
FY 2015-16 under which they shall be entitled to the drawback on FOB values of their
enhanced exports if increased beyond 10% of their previous year’s exports, as per
a. Garments = 4%,
b. Made-ups = 2%; and
c. Processed fabric = 1%
(4) Since July 1, 2015, Export Refinance
Facility and Long Term Finance Facility will be available for textile-exporters
at the most reasonable rates of the history i.e. at 4.5% and 6% respectively.
(5) The Custom Duty on import of
textile machinery under SRO 809 is zero for the Year 2015-16 as well.
(6) In order to facilitate and incentivize
the investments in plants and machinery, Technology Up-gradation Fund Scheme will
be launched in the FY 2015-16, as per the provisions of Textiles Policy 2014-19.
(7) Government is committed to introduce
latest seed technology.
To this end, amendments in Seed Act
have been passed by the National Assembly, whereas Plants Breeders Right Act will
be also be promulgated on priority basis.
(8) Spadework has been completed
on a mega project worth Rs 4.4 billion for training of 120,000 unskilled men and
women over a period of 5 year. This scheme shall be launched in FY 2015-16.
53. Agriculture remains a major focus
of our government despite the devolution of much of the operational responsibilities
to the provinces. It is on the agenda of the government to take requisite measures
to give positive price signals to farmers, protect them from vagaries of market
fluctuations and support them in the face of natural calamities.
54. A number of tax incentives are
provided to help agriculture sector, which be discussed in Part-II. Here I give
an account of measures we had announced last year:
a. Credit Guarantee Scheme for Small
and Marginalized Farmers:
The Credit Guarantee Scheme announced
in the last budget has been made operational. Under the scheme, the Government,
through the State Bank of Pakistan, will provide guarantee to commercial, specialized
and micro finance banks for up to 50% loss sharing. The scheme will cover farmers
having up to 5 acres irrigated and 10 acres non-irrigated land holdings. It will
benefit 300,000 farmer households/families with a loan size up to Rs.100,000. Total
disbursement under this scheme will be Rs.30 billion while the government will have
a contingent budget cost of Rs.5 billion.
b. Crop Loan Insurance Scheme (CLIS):
Crop loan insurance scheme is already in operation and will continue in the future.
c. Livestock Insurance Scheme: Livestock
is contributing more to agriculture than the major crops. Recently, significant
investment has been made in this sector. To encourage more investments and to incentivize
farmers to engage in livestock development, last year we announced a scheme for
reimbursement of premium for livestock insurance to mitigate the risk of losses
of small livestock farmers. This scheme is now operational and allows small
farmers having 10 cattle to get this support. The scheme will cover livestock insurance
in case of calamity and disease.
d. Agriculture Credit: We have given
boost to agriculture credit, as we know the role of credit in enhancing the output
of agriculture. During the year, we had targeted a credit flow of Rs.500 billion,
compared to Rs.380 billion during 2013-14, an increase of 32%. I am pleased to inform
this House that in first 10 months of the year 2014-15, the credit to agriculture
has been registered at Rs.369 billion, which is in line with our target. For the
next year, we are targeting a 20% increase to take it Rs.600 billion. Together with
the insurance schemes mentioned earlier, the farmers will have much better access
to financial sector than in the past.
e. Interest Free Loans for Solar
Tube Wells: In order to facilitate the small growers and to reduce heavy expenditure
incurred on diesel/electricity tube wells, it has been decided after the approval
of Prime Minister Muhammad Nawaz Sharif to provide interest free loans for setting
up new solar tube wells or replacing the existing tube wells with solar tube wells.
It is estimated that the cost of half cusec solar tube well may be up to Rs1.1 million.
Against a deposit of Rs.100,000 the government will provide interest free loans
through the commercial Banks. The government will pick up the mark-up cost on these
loans. Under this scheme it is proposed to provide mark-up free loans for 30,000
tube wells in the next 3 years. All farmers with landholdings up to 12.5 Acres will
be eligible to apply for this loan. In case the number of applications in any one-year
is more than 10,000, the beneficiaries will be selected through transparent balloting.
After installing solar tube well, a farmer using diesel engine for five hours a
day will save Rs.1660 per day and a farmer using electric pump for five hours a
day will save Rs.466 per day in running costs.
f. Increase in the Value of Production
Index Units (PIU): The present value of PIU was fixed at Rs.2000 in July 2010. This
is woefully shortage of the current values of agriculture land. In order to enable
farmers to raise larger financing facilities, it has been decided to increase the
PIU to Rs.3000 with effect from 1st July 2015.
55. Prime Minister’s Health Insurance
Scheme: Under this scheme, insurance shall be provided for tertiary health care.
In 2015-18, the premium cost of the scheme will be Rs.9 billion. Initially, the
scheme will be launched in 23 districts and coverage for hospitalization for several
diseases. The project coverage will be gradually increased to 60% of poorest segments
of population over the next three years. For areas falling under Federal Government
responsibility, such ICT, FATA, GB and AJK, the secondary medical coverage will
also be provided. The targeting of population will be done on the base of poverty
score methodology that is used for the BISP.
Prime Minister’s Special Schemes
56. In fulfillment of our promises
made during the election campaign regarding the welfare especially that of the youth,
the government announced the launching of special schemes in Budget 2013-14 on the
orders of the Prime Minister Muhammad Nawaz Sharif.
I would like to present an overview
before this House as to how these schemes have benefited the people:-
(a) Prime Minister Youth Business
Loans (PMYBL) Scheme: This scheme was started for promotion of youth entrepreneurship
and eradication of unemployment. Based entirely on merit and transparency, this
scheme offers loans at subsidized mark-up rates. It is encouraging to note
that after National Bank of Pakistan and First Women Bank Limited, 7 privatized
banks have also joined this program. So far, more than 15000 loans have been approved
under this scheme. About 20,000 applications are in under process. In the Year 2015-16,
the mark-up rate for borrower is being lowered from 8% to 6%, a reduction of 2%.
(b) Prime Minister’s Youth Skills
Development Program: This program intends to promote capacity building and giving
employment to unemployed educated youth through training in 100 demand-driven trades
across the country. Up till now 25,000 youth have benefitted from the said program,
whereas the process for training of another 25000 is at an advanced stage. For the
year 2015-16, the Program is being extended to include Madrasah students, juvenile
prisoners and the victims of terrorism.
(c) Prime Minister’s Interest Free
Loan Scheme: Under this scheme, interest free loans of Rs.50,000 average size are
being made available to the men and women from households with a score of up-to
40 on the Poverty Score Card (PSC) and with little or no access to banks or microcredit
institutions. In 2014-15, Rs.1.75 billion has been released for this scheme. So
far, this scheme has benefited 44,000 persons and it has shown 100% recovery rate.
(d) Prime Minister’s Fee Reimbursement
Scheme for Students of Less Developed Areas: Through this scheme, Federal Government
pays tuition fee for all the students registered in Masters and Ph.D programs in
HEC-approved public sector educational institutions who are domiciled in less developed
areas of Baluchistan, Gilgit, Baltistan, FATA, Interior Sindh, Southern Punjab (Divisions
of Multan, Bahawalpur & DG Khan), Districts of Layyah, Mianwali, Bhakkar, Khushab
and Attock and less developed areas of KPK (LakkiMarwat, Batgram, Kala Dhaka/Torghar,
Kohat, Bannu and Hangu). A total of 41871 students benefited in this year,
whereas average fee of Rs. 35,000 per student has been borne by the Federal Government.
To ensure maximum transparency and facilitation, HEC has designed Student Service
Portal for online applying as well as for maintaining data of beneficiary students
of this Scheme. This scheme has helped enhancing the enrolment by 100%.
(e) Prime Minister’s Youth Training
Program: will provide one year internship to unemployed educated youth nationwide
who have completed 16 years of formal education. This program will build their capacity,
enhance the employability, groom the skills and will provide experience to the youth
for the job market. In this regard, the preliminaries have been completed and the
scheme shall be launched in the Year 2015-16, wherein 50,000 internships shall be
extended in the first phase, both in public and private organizations and a stipend
of Rs.12000 per month per student shall be paid. The internships shall be distributed
on the basis of NFC quota.
(f) Prime Minister’s Scheme for Provision
of Laptops to Talented Students: Under this scheme, laptops are procured through
open competitive bidding under PPRA Rules and under the vigilance of Transparency
International Pakistan, which are then delivered to public sector universities/institutions
across Pakistan and AJK. 70,000 laptops have been distributed so far in this
manner. In addition, 700 laptops have been manufactured locally on a state-of-the-art
laptop Assembly plant. It will additionally help in technology transfer as well
as creation of jobs.
57. In total, Rs.2 billion are being
allocated in FY 2015-16 for execution of Prime Minister’s Special Schemes.
Performance Management & Compensation
58. A key challenge for development
is lack of an effective performance management and aligned compensation system in
public sector resulting in large gaps in effective delivery of public services.
Therefore, the most important single theme for reform across all areas is promotion
of institutional efficiency through Performance Management and Compensation System
at an individual, departmental or collective level. In this regard, the Prime Minister
of Pakistan has constituted a Performance Based Remuneration Committee. On initial
recommendations of the said Committee, a lump sum amount of Rs1 billion is being
allocated in the Budget 2015-16 for compensating high performance Ministries / Divisions
and individuals for achieving pre-determined results.
59. Now I turn towards the estimates
of revenues and expenditures for the next fiscal year.
60. Gross revenue receipts of the
federal government for 2015-16 are estimated at Rs4,313 billion compared to the
revised figures of Rs3,952 billion for 2014-15, showing an increase of 9.1%. We
have set an ambitious target for tax collections, as without collecting more taxes
we cannot hope to increase development spending that is crucial for economic growth.
I shall share more details of this in Part-II of my speech.
61. The share of provincial governments
out of these taxes will be Rs1,849 billion compared to Rs.1,575 billion revised
estimates for 2014-15, showing an increase of about 17.4%. For the year 2015-16,
net resources left with the federal government will be Rs.2,463 billion compared
to the revised estimates of Rs.2,378 billion for 2014-15, showing an increase of
3.6%. Federal Government recognizes that the provincial governments have increased
responsibilities of social sector service delivery under the new arrangements.
Therefore, we are consistently raising the level of provincial transfers to enable
them to improve the social services and law and order for the people of Pakistan.
62. Total expenditure for 2015-16,
is budgeted at Rs.4,089 billion compared to the revised estimates of Rs.3,902 billion
for 2014-15, showing meager increase of 4.8% which is lower than the target inflation
rate for 2015-16.
Viewed within the overall increase,
the government expenditure in real terms is actually contracting instead of expanding.
This approach of gradually increasing the revenues and reducing the expenditures
in real terms will make us self-reliant and sustainable.
63. The current Expenditure is estimated
at Rs3,128 billion for 2015-16 against a revised estimate of Rs.3,151 billion for
2014-15, showing an actual decrease in expenditure in nominal terms. However,
we have catered for the needs of the Armed Forces keeping in view the security challenges.
The defense budget is being increased from the Rs.700 billion for 2014-15 to Rs.780
billion for 2015-15, which is an increase of about 11%.
64. The development budget has been
adequately funded in order to meet the investment requirements of a growing economy.
Against a revised estimate of Rs.542 billion for PSDP during 2014-15, and for 2015-16
we have budgeted Rs.700 billion showing an increase of nearly 29%. This also includes
the Special Development Program for security enhancement as well as for rehabilitation
and resettlement of TDPs as I have explained earlier.
65. As I said earlier, we have brought
down fiscal deficit to 5% in 2014-15. We are targeting to reduce it further to 4.3%
in 2015-16. The federal deficit is projected at Rs.1,625 billion for 2015-16 compared
to the revised estimate of Rs.1,524 billion for 2014-15. With surplus contribution
from provinces of Rs.297 billion from the provinces, compared to a revised deficit
of Rs.142 billion in 2014-15, we have projected an overall fiscal deficit of Rs.1328
billion for 2015-16, compared to the revised estimate of Rs.1383 billion in 2014-15.
Now I present Part-II of the speech
which consists of tax proposals.
1. The country needs adequate fiscal
space for spending more on development and welfare of its people. Our government
believes in taxation in a growth paradigm. We have to enhance our efforts for resource
mobilization and for having an equitable and just tax system. Like last year, this
time again we have made conscious efforts so that the burden of our tax proposals
should not affect unprivileged and poor. Our proposals will ensure that affluent
classes and specially those who do not pay taxes should come forward and contribute
towards this national cause.
Broad Principles of Taxation Proposals
2. The proposals for the budget 2015-16
are mainly based on the following principles:-
i. Second phase of withdrawal of
exemptions to further eliminate the discriminatory tax exemptions and concessions.
ii. Expand the scheme of differential
taxation for filers and non-filers for penalizing non-compliance without adding
any further burden on the compliant.
iii. Customs tariff be rationalized
to reduce both the number of slabs and the maximum duty rate.
iv. Reviewing tax laws and procedures
to cut down on discretion.
v. Removal of sectoral distortions
in domestic taxes.
vi. Measures for broadening of the
tax base and documentation of economy.
vii. Increasing the share of the
3. I will now give a brief summary
of the Revenue measures proposed in the budget:
a. Change in Rate of Tax and Taxable
Holding Period for Securities:
Rate of Capital Gains Tax for Tax
Year 2015 was increased to 12.5% for securities held up to 1 year and 10% for securities
held for a period between 1 and 2 years. In line with the policy of increasing rates
in phased manner, it is proposed to increase the rates from 12.5% and 10% to 15%
and 12.5% respectively. In addition, it is proposed that securities held for a period
of more than 2 years and less than 4 years be also taxed, though, at a reduced rate
b. Increasing Cost of Non-Compliance
with Tax Laws:
In order to promote tax culture,
to discourage non-compliance with tax laws and to address the concerns of citizens
paying due taxes and resultantly having higher cost of doing business than tax evaders,
a distinction was created between a compliant and non-compliant taxpayer by prescribing
higher withholding tax rates for those not filing their Returns through Budget 2014-15.
That measure has shown good results. Continuing with the same policy, the regime
of different rates for Filer and Non-Filer is proposed to be extended on certain
other transactions. Accordingly, it is proposed that the rate of tax in the case
of Non-filers be increased in the case of contractors by 3%, in the case of suppliers
by 2% and in case of commission agents by 3%. The rate of tax on non-filer transporters
is also proposed to be enhanced by various percentages. The rates in the case
of non-residents may also be revised accordingly, to provide a level playing field.
Any person can avoid payment of this advance tax by filing of return and can also
claim adjustment or refund of this tax by filing return after the payment.
c. Adjustable advance income tax
on banking instruments and other modes of transfer for Non-Filers:
The existence of a parallel informal
economy is a major policy challenge in Pakistan. The informal sector takes benefit
of all the services of state but does not contribute to the revenue required to
provide these services. Accordingly it is proposed that adjustable advance income
tax at the rate of 0.6% of the amount of transaction may be collected on all banking
instruments and other modes of transfer of funds through banks, in the case of persons
who do not file Income Tax returns. I would like to reiterate that this provision
shall not be applicable on taxpayers.
d. Rationalizing Tax Rates for Various
Sources of Banking Companies:
Presently, tax rate of 35% is applicable
to banking companies from all sources except income from dividend which is taxed
at various rates from 10 to 25% and income from capital gains which is taxed at
a rate of 10 and 12.5%. This arrangement discriminates between different sources
of income for banks. Accordingly rate differential for different sources is proposed
to be removed and income of banks from all sources is proposed to be subjected to
income tax @35%.
e. Taxation of Dividend:
The present rate of tax of 10% on
dividend income is on the lower side as compared to most other countries. It is
proposed that the rate be increased to 12.5%. Consequently, in case of non-filers
the rate of tax is proposed to be increased from 15% to 17.5% of which 5% shall
continue to be adjustable. For Mutual Funds the existing rate of 10% shall continue.
f. Taxation of Capital Gains from
Trading of Futures Contracts:
Capital gains derived from trading
of commodity future contracts on Pakistan Mercantile Exchange (PMEX) is not exempt
from tax. However, the traders are neither filing their returns nor any withholding
tax is applicable on these transactions. It is proposed that advance adjustable
income tax at the rate of 0.1% on each transaction may be introduced to be collected
on every purchase and sale of futures contract.
g. Domestic Electricity Consumption:
At present, adjustable advance income
tax is collected at a rate of 7.5% on domestic electricity bills above Rs 100,000.
Due to reduction in electricity prices it is proposed that the threshold be reduced
to Rs. 75,000.
h. Renting Out Machinery and Certain
At present there is no withholding
tax on either use or right to use of commercial, industrial and scientific equipment
or on renting out of machinery. For non-residents, 15% final tax is already in place
on use or right to use of commercial, industrial and scientific equipment. It is
proposed that a 10% withholding tax be imposed on renting out machinery and for
use or right to use commercial, scientific or industrial equipment, in case of residents
also, and be treated as final tax liability.
i. Dividend from Real Estate Investment
Since at present no special regime
for unit holders of REIT has been prescribed it is accordingly proposed that unit
holders for REIT be treated at par with the unit holders of Mutual Funds and dividend
be subjected to same tax rates.
j. Taxation for Not Distributing
The government has taken many measures
for encouraging corporatization and several measures have been announced in this
budget to encourage investment in corporate sector through stock exchanges. However,
such measures will be ineffective if small shareholders do not get return on their
investments. In order to protect interest of shareholders and to encourage companies
to distribute dividend, it is proposed that in the case of a public company other
than a scheduled bank or a modaraba, which does not distribute cash dividends within
six months of the end of the tax year or distributes dividends to such an extent
that its reserves, after such distribution, are in excess of 100% of its paid up
capital, the excess amount may be taxed at the rate of 10%.
k. Revenue for Rehabilitation of
Temporarily Displaced Persons:
The terrorism and counter-terrorism
efforts have resulted in displacement of hundreds of thousands of people of FATA
and Khyber Pakhtunkhwa from their homes. The vulnerable sections of the population,
women, children, elderly and sick have suffered the most. The host communities have
also taken a toll. The cost of rehabilitation of these displaced persons has been
estimated at 80 billion rupees. These direct affectees of the war on terror deserve
the full support and facilitation of the Nation. To meet enhanced revenue needs
for the rehabilitation of Temporarily Displaced Persons in a dignified and befitting
manner, it is proposed to levy a one-time tax on the affluent and rich individuals,
association of persons and companies earning income above Rs. 500 million in tax
year 2015 at a rate of 4% of income for banking companies and 3% of income for all
others. It is expected that the provinces will also contribute their due share in
this national cause and the entire receipts from this source shall be utilized for
rehabilitation of TDPs.
l. Reduction in Tax Rate for Companies:
The government has been encouraging
corporate culture and documentation in the economy and has introduced a policy of
reducing corporate income tax rate by 1% annually from 35% until the tax rate is
reduced to 30%. Accordingly the rate was reduced to 33% in the preceding year. It
is proposed that, continuing with the policy, the rate may further be reduced to
32% for Tax Year 2016. This will encourage businesses to join the formal sector.
m. Exemption to Electricity Transmission
Energy is critical for the economic
growth. In order to attract Private Sector Investment in electricity Transmission
Line Projects, it is proposed to exempt profits and gains derived from Transmission
Line Projects for a period of 10 years, provided that the project is set up by 30th
n. Tax Credit for new investment
The government wants to encourage
saving and investment in documented sectors by the general public. At present, an
individual is entitled to tax credit for an investment made in shares offered by
public company listed on stock exchange subject to a maximum of 1 million rupees.
To encourage investment in new companies quoted on stock exchange, it is proposed
that this limit be enhanced to 1.5 million.
o. Tax Credit for Enlistment:
At present, a 15% tax credit is available
to a company, if it opts for enlistment in any registered stock exchange in Pakistan.
To encourage enlisting of companies on stock exchange, it is proposed that the credit
be enhanced to 20%.
p. Reduction in Withholding Tax On
Token Tax and Transfer of Vehicles:
(i). On demand of the Provincial
Governments, the rates of adjustable advance Income Tax collected with Token Tax
is proposed to be reduced by around 20 to 25% in the case of Income Tax Returns
(ii). The rate of adjustable advance
Income Tax collected on transfer of vehicles is proposed to be reduced by around
75% in the case of Income Tax Returns filers and also reduced by around one-third
in the case of non-filers.
q. Expanding the Scope of Small Company:
Income Tax Ordinance provides a reduced
rate of 25% for taxing the income of a small company as an incentive for corporatization.
To make the concession more meaningful the limit of capital at Rs 25 million is
proposed to be enhanced to Rs 50 million for qualifying as a small company.
r. Relief to Small Taxpayers:
Salaried taxpayers earning taxable
income from Rs 400,000 to Rs 500,000 are chargeable to tax at a rate of 5%. To provide
relief to this class the rate of tax is proposed to be reduced to 2%. Non-Salaried
individual taxpayers and Association of Persons earning taxable income from Rs 400,000
to Rs 500,000 are chargeable to tax at a rate of 10 %. To provide relief to this
class the rate of tax is proposed to be reduced to7%.
s. Option to Exporters to Opt Out
of the Final Tax Regime:
At present the tax withheld on the
export proceed realized by an exporter is the final tax on his income. The exporters
are being authorized to opt for assessment under the normal regime and the withheld
tax will be treated as minimum tax in such cases.
4. Now I will present the proposals
relating to Customs:
Last year, on the direction of the
Prime Minister, tariff reforms were initiated and the maximum slab of 30% was reduced
to 25% which resulted in reduction of tariff slabs from 7 to 6. This year, it is
proposed to further reduce the maximum rate from 25% to 20%. It will bring down
the number of slabs from 6 to 5. We are also determined to reduce the slabs to 4
by the year 2016.
Revenue Measures relating to Sales
Tax and Federal Excise Duty
5. Now, I present proposals relating
to sales tax and federal excise duty.
a. Increase in rates on cigarettes:
Cigarette smoking is a health hazard
and for discouraging people from smoking, rates of federal excise duty on cigarettes
are proposed to be increased from 58% to 63%. For making informal sector pay due
taxes on cigarettes, adjustable FED is proposed to be levied on filter rods @ 0.75
rupees per filter rod.
b. Rates of Further Tax:
For encouraging sales tax registration
and penalizing non -compliant businesses, rate of further tax is proposed to be
enhanced from 1%to 2%.
c. Mobile phones:
Sales Tax payable on various categories
of imported mobile phones is proposed to be increase from 150, 250 and 500 rupees
to 300, 500 & 1000 rupees respectively. On the implementation of new rates RD
imposed on import of mobile phones will be withdrawn.
d. FED on Aerated Waters:
At present, aerated waters are chargeable
to FED at concessionary rate of 9%. It is proposed to increase this rate to 12%.
e. Rationalization of sales tax rate
on export oriented sectors. The applicable rates on export oriented sectors
are 2%, 3% and 5% which are far below the standard rate of sales tax @ 17%. Certain
irresponsible tax payers are misusing this concessional tax regime. In order
to curb the mal practices it is proposed to rationalize the rates to 3%, 3% and
5%. I would also like to announce that the refund due to the export oriented sectors
relating to tax periods till 31st May, 2015 shall be issued by 31st August, 2015.
Similarly the value addition tax on commercial imports of these sectors is being
reduced from 2% to 1% and 100% sales tax adjustment will also be allowed.
Second Phase of Elimination of
6. Exemptions and concessions allowed
under different concessionary regimes cause huge loss to the national revenue. These
exemptions and concessions have been granted over the previous decades prima facie
to reduce costs of inputs for industry, incentivize exports, encourage local investors,
attract FDI, and provide relief to general public. However, these concessionary
regimes in the shape of different SROs created a complex and opaque tax structure
hampering trade and breeding malpractices. The scope and impact of these concessions
were so pervasive that in 2013 we learnt that the share of non-dutiable imports
was 62%. But the general public was simmering under high prices and no benefit on
these concessions was passed on to them. These concession benefited special classes
and awarded plethora of discretionary powers on Government functionaries.
7. When our government undertook
this gigantic task of analyzing these concessions, it was apprehended that it would
be very difficult to touch the widespread and complex concessionary regime in our
socio-economic milieu. It goes to the unwavering will and commitment of the Prime
Minister of Pakistan that despite presence of strong and influential pressure groups,
the process of elimination and curtailment of exemptions has been initiated and
in the budget 2014-15, approximately 1/3rd of these concession with a tax cost of
Rs105 billion has been withdrawn and rationalized. This historic achievement
has been recognized and appreciated by all sections.
8. This year, as a 2nd phase of the
plan of rationalization of concessionary regime in-depth deliberations and wide-ranging
consultations for minimizing the remaining concessions have been conducted. Exemptions
and concessions relating to customs, sales tax and income tax amounting to 120 billion
rupees are proposed to be withdrawn.
9. This process of withdrawal of
discriminatory SROs will help to further rejuvenate economic activity especially
by SMEs and reduce the cost of doing business in the country. The equity in taxes
will breed competitiveness and provide a better and reliable environment for local
and international investors.
I would also like to announce that
the powers of the FBR to issue exemptions/concessions have been withdrawn and those
of the Federal Government have been limited to exceptional circumstances. This reflects
our belief in the supremacy of the Parliament.
Tax Reforms Commission
10. In my last budget speech, I announced
formation of Tax Reforms Commission for analyzing and reviewing the entire tax policy
and tax administration. Subsequently, the Commission was formally established. It
comprises eminent experts in taxation and law and leaders of the business community.
The Commission is doing a commendable job in identifying areas of tax structure
and administration where policy intervention is required for improving the system.
The TRC has submitted its interim report and the final report shall be submitted
by July this year.
11. By the grace of Almighty Allah
the economy is out of turbulent waters. The challenge that we have accepted for
the next three years of our current tenure is take the economy on a higher trajectory
of growth. In order to do so it is important to have a special focus on those areas
of economy that can be catalysts in economic growth. Accordingly, we have
decided to give special incentive packages to the Construction, Agriculture, Manufacturing
and Employment Generation Sectors. These sectors can be engines of economic growth
that can pull other sectors along for the following reasons:
> These sectors form a significant
part of national GDP
> These sectors are labour-intensive
and employ a large numberof people
> Agriculture has a short gestation
period and its effect on the broader economy will be felt sooner.
> Construction Industry has a
ripple effect on sixteen other sectors of the economy.
> Manufacturing leads to employment
and thus has direct effect on the quality of life of a large number of people.
12. I will now give the details of
the incentive package for Construction sector:
a. Housing Credit:
Mark-up on housing loans obtained
by individuals from banks and other institutional lenders for construction or buying
a house is proposed to be allowed as a deduction against income up to 50% of taxable
income or Rs. 1 million. b. Suspension of Minimum Tax on
The minimum tax on builders leviable
for the business of construction and sale of residential and other buildings is
proposed to be exempted till 30th June, 2018.
c. Real Estate Investment Trust (REIT)
We want to encourage the organized
and corporatized sector to make investment in housing sector. Accordingly, certain
incentives are announced for REIT development schemes:
i. Capital Gains of any person who
sells a property to a REIT development scheme formed for the development of housing
sector is proposed to be exempt from Income Tax up to 30.6.2018. ii.
It is also proposed that if a development REIT Scheme for the development of housing
sector is set up by 30.6.2018, for the first three years the rate of Income tax
chargeable on dividend income of such REIT may be reduced by 50%.
d. Bricks and crushed stone:
In order to reduce cost of construction,
it is proposed that supply of bricks and crushed stone may be exempted from Sales
Tax for three years up to 30.6.2018.
e. Reduction in customs duty on import
of Construction Machinery:
On import of Dump trucks, Super swinger
truck conveyors, Mobile canal lining equipment, Transit miners, Concrete placing
trucks, Truck mounted cranes and Crane Lorries in used condition by the Construction
Companies registered with Pakistan Engineering Council and SECP, the Customs Duty
is proposed to be reduced from 30% to 20%.
13. The following incentives are
proposed to be given to employment generating industries:-a. Employment
Credit to Manufacturers:
In order to encourage the companies
to generate employment, it is proposed that if a company, being a manufacturer,
is set up during next three years and employs more than 50 employees duly registered
with Social Security and Employees Old Age Benefit Institution an employment tax
credit equal to 1% of the income tax payable for every 50 employees may be provided
to the company, subject to a maximum of 10%.
b. Exemption to Greenfield Projects:
Under Prime Minister’s Package exemption
was allowed from explaining source of investment for new investment in Greenfield
industrial undertakings. On demand of various investors and business community,
it is proposed that this exemption be extended up to 30th June, 2017.
c. Import of Solar Panels:
Certain items are only exempted from
Sales Tax and Customs Duty on import if they are not locally manufactured. However,
import of Solar Panels and certain related components was exempt from this ‘local
manufacturing’ condition until 30th June 2015. It is proposed that exemption from
Sales Tax and Customs Duty in this manner may be extended for one year to 30th June,
d. Domestic Production of Solar and
Wind Energy Equipment Manufacturing:
At present commercial imports in
respect of items for dedicated use for renewable sources of energy such as solar
and wind are exempt from withholding tax on import. However, no exemption is available
for the domestic manufacturers of solar and wind energy plants and equipments. It
is proposed to grant exemption, for 5 years, to industrial undertaking engaged in
the manufacturing of equipment, plant and items required to produce solar and wind
e. Concession of Customs Duty for
“Local manufacturing” condition is
not applicable on import of machinery, equipment and other capital goods for power
units valuing US $ 50 million and above. It is proposed that the condition of ‘US
$ 50 million and above’ may be replaced with the condition of ‘power units of 25
MW and above’.
14. Incentives for Agriculture Sector
are as follows:
a. Tax Holiday for Agricultural Delivery
It is proposed that for new industrial
undertakings engaged in (i) setting up and operating cold chain facilities, and
(ii) setting up and operating warehousing facilities for storage of agriculture
They may be granted Income Tax holiday
for three years if they are set up before June 30, 2016.
b. ‘Halal’ Meat Production:
Pakistan’s share in one trillion
dollar global halal food market is a pittance. In order to encourage new investments
in the halal meat production and to increase the use of modern and state-of-the-art
machinery and equipment in this sector, companies which set up ‘halal’ meat production
plants and obtain ‘halal’ certification by 31st December 2016 are proposed to be
allowed tax exemption from Income Tax for four years from the date of set up.
c. Relief to Rice Mills:
Due to low demand in international
market rice mills have suffered huge losses. In order to provide relief to them,
it is proposed that Rice Mills may be exempted from minimum tax for the Tax Year
d. Exemption on Supply of Fish:
Supply of agriculture produce including
fresh milk, live chicken birds and eggs is exempt from deduction of withholding
tax subject to certain conditions. It is proposed that exemption from withholding
tax on supply of agricultural produce may also be extended to supply of fish.
e. Import and Local Supply of Agricultural
Machinery and Equipment:
In order to promote farm mechanization
and enhance productivity it is proposed that non-adjustable sales tax at reduced
rate of 7%, instead of existing rate of 17%, may be charged on the local supply
and import of certain agricultural equipment/machinery used in Tillage and seed
bed preparation, seeding or planting, irrigation, drainage and agro-chemical application
f. Import of Agricultural Machinery:
At present Customs duty, Sales Tax
and withholding tax on import of agricultural machinery in aggregate is 28% to 43%.
It is proposed to reduce Customs Duty, Sales Tax and Withholding Income Tax cumulatively
to 9% as under:
i. Customs duty from existing
rate of 5-20% to 2%;
ii. Sales Tax from 17% to non-adjustable
Sales Tax at 7%; and,
iii. WHT from 6% to 0%
g. Interest Free Loans for Solar
In order to facilitate the small
growers and to reduce heavy expenditure incurred on diesel/electricity tube wells
it is proposed to provide interest free loans for setting up new solar tube wells
or replacing the existing tube wells with solar tube wells. It is estimated
that the cost of half cusec solar tube well may be up to Rs 1.1 million. Against
a deposit of Rs.100,000 the government will provide interest free loans through
the commercial Banks. The interest on these loans will be picked up by the government.
Under this scheme it is proposed to provide interest free loans for 30,000 tube
wells in the next 3 years. All farmers with landholdings up to 12.5 Acres will be
eligible to apply for this loan. In case the number of applications in any one year
is more than 10,000 the beneficiaries will be selected through transparent balloting.
After installing solar tube well, a farmer using diesel engine for five hours a
day will save Rs.1660 per day and a farmer using electric pump for five hours a
day will save Rs.466 per day in running costs.
15. The contribution of Aviation
Sector in Pakistan is a small fraction of one percent of GDP as compared to share
of the sector at 3.4% in the global GDP. Our Government is confident that the following
package shall cause a spurt in the growth of this sector.
In this regard a few proposals are
presented below :-
a. Exemption from Customs Duty and
It is proposed that Customs Duty
and sales tax in respect of following items used in Aviation Sector may be exempted.
i. Aircraft – Whether imported or
ii. Maintenance Kits for Trainer
iii. Spare parts for use of aircraft,
trainer aircraft and simulator
iv. One time import of Machinery,
equipment & tools imported by recognized Maintenance, Repair & Overhaul
v. Operational tools, machinery,
equipment and furniture & fixtures on one time basis for authorized Greenfield
vi. Aviation simulators by recognized
b. Remote Area Routes:
Infrastructure connectivity with
major economic hubs is key to economic development of a region. Some areas of the
country having great economic potential are however located far from existing major
economic routes. In order to open up remote areas through aviation links it is proposed
that air routes in Gilgit baltistan, Makran Coastal belt, Azad Jammu and Kashmir,
Chitral and FATA be exempted from payment of FED and withholding tax.
Relief Measures for Khyber-Pakhtunkhwa
16. Last but not the least, let me
share with this house some relief measures for Khyber-Pakhtunkhwa.
As all of us know that the economy
of Khyber-Pakhtunkhwa has suffered immensely due to terrorism and efforts to counter
it. In order to revive the economy of Khyber-Pakhtunkhwa and to provide relief to
the people, the following measures are proposed:
a) Five years Income Tax holiday
on all new manufacturing units set up in KP between 1-7-2015 and 30-6-2018. Such
units shall also be exempted from payment of turnover tax for five years.
b) To address the demand of traders
and to facilitate exports from KP to Afghanistan, exports of perishable goods namely
fruits, vegetables, dairy products and meat are proposed to be allowed against Pak
currency instead of dollars w.e.f. 1-7-2015.
c) Quota for ghee and vegetable oil
under DTRE for export to Afghanistan and Central Asia is proposed to be enhanced
three times from 1000 Metric Ton per 90 days to 1000 Metric Ton per month.
d) The legacy issues regarding minimum
tax payable on turnover under the previous KP package available for tax years 2010
to 2012 shall also be resolved. Minimum Income Tax is leviable under the existing
law however, to address the hardship of KP businessmen suitable amendments shall
e) The pending issue of Sales Tax
refunds payable as a result of the above mentioned package shall be resolved latest
by 30th September, 2015.
f) I would also like to share with
this August House a breakthrough in trade with Central Asia. Exporters from KP in
particular and other exporters in general were facing hardship because of the requirement
of financial guarantees equivalent to 110% of the Custom duty by Afghanistan on
our exports to Central Asia. Moreover, our exporters had to pay US $ 100 on each
25 tons of export transiting through Afghanistan to Central Asia. I am happy to
announce that during the recent visit of the Prime Minister of Pakistan to Kabul,
the issue was taken up with the Afghan side and Economic Adviser to Afghan President
informed me on telephone on 31st May, 2015 that they have decided to abolish these
measures. This decision will boost our exports to Central Asian countries,
and will reduce the cost for exporters.
Pay and Allowances for Government
1. As you know, we are a resource
poor economy where demands are many and resources are limited. The present government
is committed to reduce non-productive expenditure to achieve greater availability
of fiscal space for development spending. This year inflation has substantially
come down and there is a trend of price stability.
However, the government is fully
cognizant of low compensation level of government employees and pensioners. As per
past practice, the Government had constituted a committee which submitted its recommendation
keeping in the inflation and fiscal constraints. The government has taken following
decisions in this regard:-
1) 7.5% Ad-hoc Relief Allowance on
running basic pay will be allowed to all federal government employees with effect
from 1st July 2015, as against the recommendation of 5% increase by the Committee.
2) Ad-hoc increases of 2011 and 2012
will be merged in the pay scales as recommended by the Committee.
3) Medical Allowances of all government
employees is being enhanced by 25%.
4) One premature increment will be
allowed to employees of grade 5 with effect from 1st July 2015. Last year pre-mature
increment was allowed to employees of grade 1-4.
5) A uniform Ph.D. Allowance of Rs.10,000
per month will be allowed to Ph.D./D.Sc. degree holders working under federal government
with effect from 1st July 2015. This will replace the existing Science and Technology
Allowance of Rs.7,500 per month and Ph.D. Allowance of Rs.2,250 per month.
6) The rates of special pay to Senior
Private Secretaries, Private Secretaries and Assistant Private Secretaries are being
increased by 100%.
7) The rate of orderly allowance
and special additional pension is also being increased to Rs.12,000 per month.
8) For the welfare of the labor class
and in line with increase in pay of government employees, the minimum wage rate
is also being increased from Rs.12,000 to Rs.13,000 per month.
2. Following relief measures are
being announced for the pensioners;-
(1) 7.5% increase in net pension
to all pensioners of federal government with effect from 1st July 2015.
(2) Medical Allowances of pensioners
is being enhanced by 25%.
(3) Extension of family pension to
widowed/divorced daughter for life or till re-marriage with effect from July 1,
(4) Revival of policy for restoration
of surrendered portion of commuted value of pension after outliving the prescribed
(5) Upper limit of investment in
Bahbood Saving Scheme of National Savings by the pensioners and senior citizens
is being enhanced from Rs.3 million to Rs.4 million.
3.Additional financial impact of
the proposed increase in pay, pension and allowances is estimated at Rs.46 billion/annum.
Support for Widows of Victims
of Suicidal Attacks
4. Our nation has sustained great
losses due to suicide attacks.
Many families have seen their loved
ones sacrificing lives and their hardships have increased as their bread-earners
have gone. To provide relief to the widows of suicide attack victims, the Government
has decided that any outstanding loan including markup up to Rs.1 million as on
30-6-2015, obtained by the deceased husband in his own name or in the name of the
widow from a bank or financial institution will be borne by the government.
Entitlement to this facility will be applicable to a widow who has not remarried
and provides an affidavit that the government has not previously given any compensation
on this account and that she has no resources to discharge the loan and markup obligation.
Compensation to Mirani Dam Affectees
5. A tropical cyclone had hit the
site of Mirani Dam on 26th June 2007 and heavily damaged houses, orchards and property
of the residents in its vicinity. The issue of compensation against these damages
has not been given due attention in the past. In order to provide relief to the
affectees, Prime Minister Muhammad Nawaz Sharif has decided that Federal Government
and Balochistan Government will jointly compensate for the damages to the tune of
6. In the backdrop of economic performance
in the last two years, I have presented the Budget 2015-16. After achieving 2 of
the 3 objectives set in June 2013, namely prevention of default and stabilization
of the economy, we are now embarking on the path of promoting inclusive growth.
7. Federal PSDP of Rs.700 billion
and provincial investments of Rs.814 billion will take public sector development
spending to Rs.1514 billion, which is nearly 5% of GDP. Together with investments
in private sector, including under CPEC (other than those included in the PSDP),
the investment to GDP ratio will rise to the target of 16.5% from 13.5% registered
in the current year.
8. This investment will spur growth
that will create job opportunities for our youth. Both through employment effect
of this investment as well as poverty alleviation programs undertaken by the Government
people will be lifted from poverty. The public investments in infrastructure, particularly
in water, power, highways and railways, will have secondary effects both on growth
and employment as new opportunities will emerge and cost of doing business will
9. We are doing so on the back of
a stable economy. We are following a serious program of reforms in all sectors of
the economy aimed at removing distortions, inefficiencies, enhancing regulatory
oversight and encouraging competitive markets.
10. We are confident that Pakistan
has a bright future. We are devoting energies to actualize the true potential of
our people, which is second to none. All that is needed is an environment of merit,
transparency, sincerity and sacrifice for the nation, which is what we are committed
to. As I said last year, Prime Minister Nawaz Sharif believes in the destiny of
this nation and he is determined to lead the country toward this destiny through
tireless devotion, sagacity and service to the people.
11. This destiny was recognized by
none other than the father of the nation, Quid-e-Azam Mohammad Ali Jinnah, who said,
while addressing a mammoth rally at University Stadium at Lahore on 30th October
“Do your duty and have faith in God.
There is no power on earth that can undo Pakistan. It has come to stay. Our deeds
are proving to the world that we are in the right and I can assure you that the
sympathies of the world, particularly of the Islamic countries, are with you. We
in turn are grateful to every nation who has stretched out to us its hand of help
12. The Quaid was fully aware of
the latent potentialities of our people. He had the foresight to see that Pakistan
has come to stay. But the man who gave the vision of Pakistan had done so
much earlier. It was such a destiny he also recognized when he said:
13. I end my speech with the prayer
that may Allah enable us to realize the hidden potentialities of this nation. Aameen.
14. Pakistan Paindabad.