Pakistan Budget 2024: Focus on Development and Public Welfare

The government of Pakistan has announced its budget for the financial year 2024-25, with a clear focus on development and public welfare. The total budget outlay stands at Rs9.1 trillion, marking a significant increase compared to the previous fiscal year. The budget 2024 reflects the government’s commitment to addressing economic challenges, boosting growth, and improving the living standards of the population. Here is a detailed overview of the key allocations and priorities outlined in the Pakistan Budget 2024.

Major Allocations and Economic Goals

Health Sector: Strengthening Healthcare Services

The health sector has received substantial attention in this year’s budget, with an allocation of Rs540 billion, representing a 20% increase from the last fiscal year. The government aims to enhance healthcare services and ensure better access to medical facilities for all citizens. Key initiatives include:

• Free Medicines: Rs60 billion has been earmarked for providing free medicines to underprivileged patients in outpatient departments (OPDs) of public hospitals. This initiative aims to reduce the financial burden on low-income families and ensure essential medicines are accessible to those in need.
• Universal Health Coverage: Rs55 billion has been allocated for the Universal Health Coverage program, which aims to extend health insurance to a broader segment of the population. This initiative is expected to improve healthcare access and reduce out-of-pocket expenses for medical treatments.

Education: Investing in the Future

Recognizing the importance of education in driving economic growth and social development, the government has allocated Rs800 billion for the education sector. This represents a significant increase of 18% compared to the previous budget. Key allocations include:

• Primary and Secondary Education: Rs400 billion has been allocated for primary and secondary education, focusing on improving infrastructure, teacher training, and learning outcomes. The government plans to construct 1,000 new schools and upgrade 500 existing ones.
• Higher Education: Rs250 billion has been earmarked for higher education, with a focus on enhancing research capabilities and expanding scholarship programs. This allocation includes Rs50 billion for the development of new universities and research centers.

Infrastructure Development: Boosting Economic Growth

Infrastructure development remains a top priority in the budget 2024, with an allocation of Rs1.5 trillion. The government aims to improve transportation networks, energy infrastructure, and urban development to support economic growth and job creation. Key projects include:

• Road and Transport: Rs600 billion has been allocated for the construction and maintenance of roads, highways, and bridges. Major projects include the completion of the Karachi-Lahore Motorway and the expansion of the Gwadar Port.
• Energy Projects: Rs400 billion has been earmarked for energy projects, including the development of renewable energy sources and upgrading existing power plants. The government aims to increase the share of renewable energy in the national grid to 30% by 2030.

Social Welfare: Supporting Vulnerable Populations

The budget 2024-25 emphasizes social welfare programs to support vulnerable populations, with an allocation of Rs350 billion. Key initiatives include:

• Benazir Income Support Program (BISP): Rs150 billion has been allocated for BISP to provide financial assistance to low-income families. The program aims to increase the monthly stipend and expand coverage to more beneficiaries.
• Ehsas Program: Rs100 billion has been earmarked for the Ehsas Program, which focuses on poverty alleviation, education, and health services. The program includes initiatives such as interest-free loans, vocational training, and school stipends for children.

Agriculture and Rural Development: Enhancing Food Security

Recognizing the importance of agriculture in Pakistan’s economy, the government has allocated Rs300 billion for the agriculture sector. This represents a 15% increase from the previous budget. Key allocations include:

• Subsidies and Support: Rs150 billion has been earmarked for subsidies on fertilizers, seeds, and agricultural machinery. The government aims to support farmers in improving crop yields and reducing input costs.
• Irrigation and Water Management: Rs100 billion has been allocated for irrigation and water management projects, including the construction of new dams and canals. These projects aim to enhance water availability for agriculture and mitigate the impact of climate change on farming.

Defense and Security: Ensuring National Security

The defense budget for 2024-25 stands at Rs1.3 trillion, marking a 10% increase from the previous fiscal year. The government aims to strengthen national security and modernize the armed forces. Key allocations include:

• Modernization of Armed Forces: Rs800 billion has been allocated for the modernization of the armed forces, including the procurement of new equipment and technology. The government plans to upgrade existing military infrastructure and enhance training programs.
• Border Security: Rs300 billion has been earmarked for border security and counter-terrorism efforts. This includes the construction of border fences, surveillance systems, and training for border security personnel.

Environment and Climate Change: Building a Sustainable Future

The government has allocated Rs200 billion for environmental protection and climate change initiatives. This represents a 25% increase from the previous budget. Key initiatives include:

• Reforestation and Conservation: Rs100 billion has been earmarked for reforestation and conservation projects, including the Billion Tree Tsunami project. The government aims to increase forest cover and protect biodiversity.
• Climate Resilience: Rs70 billion has been allocated for climate resilience projects, including flood control and disaster management. The government aims to enhance the country’s capacity to respond to natural disasters and mitigate the impact of climate change.

Economic Growth and Fiscal Measures

Tax Reforms and Revenue Generation

To support economic growth and fiscal stability, the government has introduced several tax reforms and revenue generation measures. Key initiatives include:

• Broadening the Tax Base: The government aims to increase the number of taxpayers by improving tax compliance and reducing evasion. This includes measures such as the implementation of a digital tax system and enhanced monitoring of high-income earners.
• Sales Tax Reduction: The sales tax rate has been reduced from 17% to 15% to stimulate consumer spending and support businesses. The government expects this reduction to boost economic activity and increase tax revenues in the long run.

Public Debt Management

The government has outlined a comprehensive plan to manage public debt and reduce fiscal deficits. Key measures include:

• Debt Restructuring: The government plans to negotiate with international creditors to restructure existing debt and secure favorable terms. This includes seeking longer repayment periods and lower interest rates.
• Fiscal Discipline: The budget emphasizes fiscal discipline and efficient use of public funds. The government aims to reduce unnecessary expenditures and improve the efficiency of public spending.

Key Priorities of the Federal Government for FY 2024-25

Budget for FY 2024-25 has its foundations on the key macro-economic and fiscal
priorities of the Government. While progress on the economic front has been steady in recent
y ears, the stage is now set f or the country to gear itself towards an era of sustained and
inclusive growth with reforms across all sectors of the economy . Fiscal discipline and right
sizing, reducing the footprint of the government through privatization, stimulating investments,
reorienting the productive sector towards exports, optimal revenue mobilization with a broader
tax base, correcting energy sector imbalances and a better targeted welfare system are some
of the areas where the Government is determined to keep its focus going forward

The Government has set challenging revenue targets f or FY2024-25. This
commensurate with the ongoing reforms at the Federal Board of Revenue where end-to-end
digitization is on the cards. Use of AI will supplement this initiative as FBR automates its
processes. A compliance risk management system is also being introduced to ensure
compliance to tax laws. On the expenditure side, non-essential spending has been curtailed
under austerity measures and SOEs are being revamped f or improved management and
governance. Going forward, this will create the necessary fiscal space f or enhanced pro-poor
spending, climate change mitigation, and provision of quality public services. PSDP has been
allocated Rs. 1,400 billion, a historically high figure, to ensure development work on energy and
water sector projects, projects in the IT sector, and f or the special areas of AJK, GB and the
merged districts of Khyber Pakhtunkhawa

The Budget Strategy for FY 2024-25

FY 2024-25 budget is anchored in principles of sound fiscal and debt management.
It prov ides a pathway f or economic rev iv al and stability , outlining strategic directions f or
Government revenue generation and spending priorities. It lay s the groundwork f or addressing
fiscal depicits and reducing inflationary pressures in the short to medium term. Fiscal
consolidation, strengthening the country ‘s external accounts, and improving the balance of
payments position are central features of the FY 2024-25 budget.

Main Objectives of FY 2024-25 Budge

• Economic stability and growth through fiscal consolidation and efficient use of public money .
• Strengthening policy framework for revitalizing the private sector, fostering
• entrepreneurship, encouraging investment, and promoting innovation to stimulate economic growth.
• Prioritizing improvements in the country ‘s balance of payments position.
• Bringing public debt to GDP ratio to sustainable levels.
• Supporting vulnerable section of society through pro poor initiatives.
• Improving service delivery /public good by funneling more funds into PSDP, introducing
• sector specific reforms and encouraging innovation.
• Education and skill development of youth.
• Integrating green and gender responsive budgeting into public finance management.

TABLE – 4

REVENUE RECEIPTS

Table-4 presents the detail of Revenues collected by FBR as given in Table-1, Part-II.

TABLE – 5

NON TAX REVENUE RECEIPTS

Table-5 shows the Non Tax Revenues details realized by the other government functionaries.

Distribution of Resources Among Federation and Provinces

1. Pakistan is a Federal democracy . In order to maintain inter-governmental fiscal
   relationship, Article 160 of the Constitution prov ides f or setting up of a National Finance
   Commission (NFC) with intervals not exceeding five y ears. The mandate of NFC is to
   make recommendations to the President f or the distribution of resources between the
   Federal and Provincial Governments. The recommendations of the NFC are given legal
   cover through a President’s Order No. 5 of 2010. The relevant provisions of President’s
   Order No. 5 of 2010 as amended vide No. 6 of 2015 are as under:
   (i) Distribution of Revenues.—(1) The divisible pool taxes in each y ear shall consist of the following taxes levied and collected by the Federal Government in that y ear, namely :─
   (a) taxes on income;
   (b) wealth tax;
   (c) capital value tax
   (d) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed;
   (e) export duties on cotton;
   (f) customs duties;
   (g) federal excise duties excluding the excise duty on gas charged at well-head; and
   (h) any other tax which may be levied by the Federal Government.
2. One percent of the net proceeds of divisible pool taxes shall be assigned to Government of Khyber Pakhtunkhwa to meet the expenses on war on terror After deducting the amounts as prescribed in clause (2), of the balance amount of the net proceeds of divisible pool taxes, fifty -six percent shall be assigned to provinces during the financial y ear 2010-11 and fifty -seven and half percent from the financial y ear 2011-12 onwards. The share of the Federal Government in the net proceeds of divisible pool shall be forty -f our percent during the financial y ear 2010-11 and forty -two and half percent from the financial y ear 2011-12 onwards
   (ii) Allocation of shares to the Provincial Governments.—(1) The Province-wise ratios given in clause (2) are based on multiple indicators. The indicators and their respective weights as agreed upon are:—
   (a) Population 82.0%
   (b) Poverty or backwardness 10.3%
   (c) Revenue collection or generation 5.0%
   (d) Inverse population density 2.7%
   (2) The sum assigned to the Provincial Governments under Article 3 shall be distributed amongst the Provinces on the basis of the percentage specified against each:─
   (a) Balochistan 9.09%
   (b) Khyber Pakhtunkhwa 14.62%
   (c) Sindh 24.55%
   (d) Punjab 51.74%
   Total 100.00%
3. The Federal Government shall guarantee that Balochistan province shall receive the projected sum of eighty -three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first y ear of the Award. Any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement f or Balochistan shall remain protected throughout the remaining f our y ears of the Award based on annual budgetary projections.
   (iii) Payment of net proceeds of royalty on crude oil.─Each of the provinces shall be paid in each financial y ear as a share in the net proceeds of the total royalties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Province in that y ear bears to the total production of crude oil.
   (iv) Payment of net proceeds of development surcharge on natural gas to the Provinces.─(1) Each of the Provinces shall be paid in each financial y ear as a share in the net proceeds to be worked out based on average rate per MMBTU of the respective province. The average rate per MMBTU shall be derived by notionally clubbing both the royalty on natural gas and development surcharge on Gas. Royalty on natural gas shall be distributed in accordance with clause (1) of Article 161 of the Constitution whereas the development surcharge on natural gas would be distributed by making adjustments based on this average rate.
   
   (2) The development surcharge on natural gas f or Balochistan with effect from 1st July 2002, shall be re-worked out hypothetically on the basis of the formula given in clause (1) and the amount, subject to maximum of ten billion rupees, shall be paid in f iv e y ears in f iv e equal installments by the Federal Government as grants to be charged on the Federal Consolidated Fund.
   (v) Grants-in-Aid to the Provinces.―There shall be charged upon the Federal Consolidated Fund each y ear, as grants-in-aid of the revenues of the province of Sindh an amount equivalent to 0.66% of the provincial share in the net proceeds of divisible pool as a compensation f or the losses on account of abolition of octroi and zilla tax.
   
   (vi) Sales tax on services.—NFC recognizes that sales tax on services is a Provincial subject under the Constitution of the Islamic Republic of Pakistan, and may be collected by respective Provinces, if they so desired.
   (vii) The President has constituted 10th NFC on 21st July , 2020 f or consideration on distribution of resources afresh.
   Detail of Provincial share of Federal Taxes f or budget estimates and revised estimates of 2023-24 and budget estimates of 2024-25 are given below:-

TABLE – 7

CAPITAL RECEIPTS (NET)

Table-7 explains Capital Receipts (Net) and their sources. It comprises of Net Lending of PSEs, (Table-1) which is the difference between disbursement minus recovery of loans by PSEs (Others).

The second part shown at Sr. No.II of this table relates to the Non Bank Borrowing as indicated at Sr. No.II of Table-1 of Part-II.

TABLE – 8

PUBLIC ACCOUNT (NET)

Table-8 indicates the position of Public Account of Federation (Net):

TABLE – 9

EXTERNAL RESOURCES

Table-9 indicates the details of Net External Receipts and shows details of inflow minus repayments.

TABLE – 11

FUNCTION WISE CURRENT EXPENDITURE

Table-11 shows details of Current expenditure which is divided into Ten (10) functional items as per Charts of Accounts i.e. how much is utilized of the Government.

The detail of Expenditure under above Ten Functions (10 Tables) are as under:-

GENERAL PUBLIC SERVICE

DEFENCE AFFAIRS AND SERVICES

PUBLIC ORDER AND SAFETY AFFAIRS

ECONOMIC AFFAIRS

ENVIRONMENT PROTECTION

HOUSING AND COMMUNITY AMENITIES

In addition to the above allocations under the Current Budget as per ten classification
heads, the Federal Gov ts provides funds f or various purposes.
In order to alleviate the impact of inflation on citizens, especially the poor segments
of society , the Federal Government spends a fairly large sum on providing power and food
subsidies

TABLE – 13

GRANTS AND TRANSFERS

Table-13 gives details of Grants and Transfer to provinces and other entities as provided by the Federal Government. A single figure is given in Table-1, Part-II.

TABLE – 14

CURRENT LOANS & ADVANCES

Table-14 shows Current Loans & Advances as provided by Federal Government to Gov ts. of AJK, GB and various institutions as well as Gov t. Servants to enable them to meet their financial requirements. The details are as under:

TABLE – 15

CURRENT INVESTMENTS

Table-15 shows detail of Current Investments through equity . The Federal Government invests funds in various Companies, Banks etc, to earn Dividends which results an increase in Government’s Revenues:

TABLE – 16

DEVELOPMENT LOANS AND ADVANCES

Table-16 shows Development and External Development Loans & Advances as made by Federal Government to Provinces, AJK & GB, PSEs, Financial / Non-Financial Institutions, District Governments / TMAs and others to assist them in carrying out their Development Programmes.

Development Loan and Advances are part of project aid disbursed by foreign donors and are used to Finance PSDP. The loans are re-lent by the Federal Government to Provincial Governments and PSEs.

Public Sector Development Programme (PSDP)

The Public Sector Development Programme (PSDP) is the main instrument or improving the socio economic conditions in the country and achieving the macroeconomic & development objectives and targets set by the government, which yield maximum benefits f or the society in the shortest possible time

TABLE – 17

PSDP 2024-25

Table-17 shows the details of PSDP size f or FY 2024-25 in respect of Ministries / Divisions / Departments / Corporations and f or Special Packages / Relief , explaining the figures of PSDP given in Table-1, Part-1.

TABLE – 18

CLIMATE, GENDER AND DISASTER

A Balanced and Forward-Looking Budget

The Pakistan Budget 2024-25 reflects the government’s commitment to addressing economic challenges, supporting public welfare, and promoting sustainable growth. With significant allocations for health, education, infrastructure, and social welfare, the budget aims to improve living standards and create a more prosperous future for all citizens. The emphasis on fiscal discipline, tax reforms, and debt management demonstrates the government’s resolve to achieve economic stability and build a resilient economy. As the government implements these initiatives, the people of Pakistan can look forward to a brighter and more prosperous future.