The Federal Cabinet on Tuesday approved the Budget Strategy Paper (BSP) for the next fiscal year (FY22) expecting significantly higher contributions from provinces. To finance fiscal deficit and almost to stop major expenditures like defense, pension, and running of civil government to ensure enough funding for higher interest payments in the footprint of IMF.
The BSP set a target of an economic growth rate of 4.2 percent for next year, about 8pc rate of inflation, budget deficit at 6pc of GDP and 84.3pc of public debt to GDP ratio. Gross federal revenues are estimated to go up by more than 25pc to Rs7.99 trillion as the government pushes forward a series of tax adjustments like widening of GST and income tax net, besides continually banking on a number of non-tax revenues like petroleum levy and so on.
The budgetary allocation for FY22 has been put at Rs1.330tr for defence which is just 2.7pc higher than the current fiscal year. Estimates for debt servicing have been put at Rs3.1tr for next year — about 6.3pc higher than the current year. Gross federal revenues are estimated to go up by a significant 25pc.
Prime Minister Imran Khan chaired the meeting and also approved revised estimates for the current fiscal year because of some key slippages on the expenditure side. The meeting also cleared the Medium-Term Budget Strategy Paper (MTBSP) for FY2021-22 to FY 2023-24.