The Pakistan federal budget of 2009–2010 has been prepared in accordance with the
budgeting and accounting classification system that has been approved by
the Government of Pakistan as an integral part of the New Accounting
Model.
This is the first year the federal budget is being prepared using the
newly adopted Medium-Term budgetary Framework (MTBF). Under this
method macro projections are made over a rolling 3-year budgetary horizon.
This year, expenditure ceilings were issued to Ministries on recurrent budget
after Cabinet's approval, in line with the Government's stated priorities.[1]
Overview
The Government of Pakistan announced federal budget for fiscal year 2009–2010 having total volume of Rs 2.489 trillion. The following major changes reported by federal government:
Rs50 billion allocated for the displaced of operation in Malakand Division
Inflation rate has declined to 14.4 percent and it will further decline to single digit in the next fiscal year
Rs 1.488 billion has been allocated for courts
Tax base will be broadened
Property gains tax will be expanded
CVT will be continued
GDP growth expected to be 3.3 percent for 2009–10
Salaries of armed forces will be raised from 1 July
Inflation target for 2009–10 will be 9%
Rs 70 billion for Benazir Income Support Program for 09-10
Fiscal deficit will be limited to 4.9 percent or Rs 722 billion
Current expenditure will be curtailed by 15.3 percent
Carbon surcharge will be introduced in FY10
Withholding tax on domestic vehicles ended
Rs 2.2 billion allocated for environment
Tax target raised to Rs 2.17 trillion
Rs 23.1 billion for health.
Duty on wind power plants withdrawn.
Social protection net being introduced for farmers.
Agriculture and value addition to be given special attention.
Use of new technology in agriculture sector to be encouraged.
Rs 18 billion for PSDP which is 25 percent higher than the previous year
CVT on property to be increased to 4 percent from 2 percent.
Petroleum development levy to end in FY10.
Government raises salaries of government of employees by 15 percent.
Tax Collection Target has been set at Rs 1377.5 billion
Current Expenditures are estimated at 1699.19 billion
Allocation for People's Works Program: Rs 28 billion
Allocation for Workers’ Welfare Fund: Rs 10.8 billion
Government and armed forces’ retired employees will receive 15 percent raise in their net pensions from 1 July 2009
An increase of allowance equivalent to one basic pay, effective from 1 July 2009, has been approved for the military's personnel deputed in the western part of the country. All the members of the armed forces will get the same from 1 January 2010.
The provincial share in federal revenue receipts is estimated at Rs 655 billion during 2009–10, which is 15.3 percent higher than the budget estimates for 2008–09. The capital receipts (net) for 2009–10 have been estimated at Rs 191 billion, against Rs 221 billion budget estimates of 2008–09.
The external receipts in 2009–10 are estimated at Rs 510 billion, which shows an increase of 70 percent over the budget estimates of 2008–09. The overall expenditure during 2009–10 has been estimated at Rs 2482 billion, of which the current expenditure is Rs 1699 billion, and development expenditure at Rs 803 billion.
Current expenditure shows an increase of 3.5 percent over the revised estimates of 2008–09, while development expenditure will increase by 68.1 percent in 2009–10 over the revised estimates of 2008–09. The share of current expenditure in total budgetary outlay for 2009–10 is 68.5 percent, as compared to 79 percent in the revised estimates for 2008–09.
The expenditure on General Public Services (inclusive of debt servicing transfer payments and superannuation allowance) is estimated at Rs 1189 billion, which is 70 percent of the current expenditure. The size of Public Sector Development Program (PSDP) for 2009–10 is Rs 646 billion, while for other development expenditures an amount of Rs 157 billion has been allocated.
The PSDP shows an increase of 54 percent over the revised estimates 2008–09, which were mercilessly slashed during the current year to meet the budget deficit target agreed with the IMF. The provinces have been allocated an amount of Rs 200 billion for budget estimates 2009–10 in their PSDP.
An amount of Rs 25 billion has been allocated for Earthquake Reconstruction and Rehabilitation Authority (Erra) in the PSDP 2009–10. However, there are no foreign loans expected for this purpose in 2009–10. The budget for fiscal year 2008–09 was estimated a total of 31250 million rupees but the revised estimates gave a zero figure. It is not clear whether this is indicative of the donors' backing out of their commitments.[3]
Change
The government on 18 June withdrew the decision of levying carbon surcharge on Compressed Natural Gas (CNG) by deleting the word "carbon" from the head of the levy. Now "surcharge" will be used for taxing petroleum products from financial year i.e. 2009–10 after severe drubbing from different quarters.
Prime Minister Syed Yousuf Raza Gilani agreed on the proposal of 20 percent increase in salaries and pension of government employees.
Tax on SMS has been removed.
