The federal government aims to secure $2 billion from commercial banks to increase reserves to $14 billion by the end of the current fiscal year 2024-25. This move is part of ongoing efforts to stabilise the economy, as the country faces a range of economic challenges, according to a media report.
The government has only managed to utilise around 40% of the Rs1.1 trillion allocated for development funds in the revised budget for the outgoing fiscal year. The Finance Ministry informed the National Assembly Standing Committee on Finance and Revenue that this low utilisation was primarily due to challenges in fiscal management and reallocation of resources.
The committee was briefed on several proposals for the upcoming fiscal year, including a special relief allowance for military personnel. A 50% allowance is proposed for officers, while 20% is suggested for junior commissioned officers and soldiers.
Despite setbacks in development spending, Finance Minister Muhammad Aurangzeb expressed optimism about the economy, stating that there is room for further policy rate cuts, and he hopes to bring it down to a single digit by the end of the year.
The government has also adjusted the Public Sector Development Programme (PSDP), reducing its allocation from Rs1.1 trillion to Rs967 billion, though it is expected that even this revised figure will not be fully utilized.
A significant portion of government spending has been allocated to the power sector, with Rs115 billion in supplementary grants earmarked for independent power producers. The committee expressed concerns over the low utilization of these funds and the impact on overall economic growth.
The government also expects to raise Rs1,468 billion in Petroleum Development Levy (PDL) for the next fiscal year, up from Rs1,281 billion this year. Secretary Finance further outlined the federal financing for the next fiscal year, estimating Rs6,501 billion for the deficit, with a decrease in external financing.
Meanwhile, the committee raised concerns about a range of economic issues, including tax collection, inflation, and fiscal deficits. The government has set an inflation target of 7.5% for the next year and aims to reduce the fiscal deficit to 3.9% of GDP, down from 5.9% in the current fiscal year.
The Finance Minister also highlighted tax reform efforts, with a target of Rs14,131 billion in tax collection for the next fiscal year, marking an increase of almost 9% from the current year. Non-tax revenue is projected to rise to Rs5,147 billion, driven by various fiscal adjustments, including privatization initiatives for Pakistan International Airlines (PIA) and the Roosevelt Hotel.
