Salient features of Salient features of Budget Budget 2014-152014-15 of of

PakistanPakistan

Presented By: Aasim MushtaqAasim MushtaqRoll No: 08Roll No: 08

3rd Semester3rd Semester

Federal Budget: A reviewFederal Budget: A review

The federal budget for fiscal year 2014-15 is the second Budget of PML(N’s)

Government for FY15 was presented on 3rd June, 2014 by the Finance Minister,

Mr. Ishaq Dar with aggregate total outlay of PKR 4.3 trillion which is 8%

higher than last year’s budget.

Economic ReviewEconomic Review

The key feature of the current fiscal year was the stabilization of the economy to certain extent through

Obtaining IMF’s Extended Fund Facility (EFF)Obtaining IMF’s Extended Fund Facility (EFF) A billion dollar from auction of 3G / 4G licensesA billion dollar from auction of 3G / 4G licenses Raising loans from international money marketRaising loans from international money market Clearance of circular debt of power sector that Clearance of circular debt of power sector that resulted in some reduction in the power shortages resulted in some reduction in the power shortages Privatization program during the yearPrivatization program during the year

GDP Growth

Real GDP growth of Real GDP growth of 4.1%4.1% during FY14 has during FY14 has slightly improved compared to earlier three years slightly improved compared to earlier three years average growth of around 3.7%average growth of around 3.7% The main contributor to slight improvement in The main contributor to slight improvement in the GDP growth was the the GDP growth was the industrial sectorindustrial sector

Foreign Exchange

The US Dollar to PKR exchange rate has virtually The US Dollar to PKR exchange rate has virtually remained the same as it was at the start of the remained the same as it was at the start of the year, and is showing signs of stabilizationyear, and is showing signs of stabilization Due to EFF and auction of 3G/4G the PKR Due to EFF and auction of 3G/4G the PKR exchange rate was improvedexchange rate was improved After rising sharply to a level of PKR 108 / USD, it After rising sharply to a level of PKR 108 / USD, it now resides in a stable range of now resides in a stable range of PKR 98-100 / USDPKR 98-100 / USD

Tax Collection

Since last few years tax collection as a percentage Since last few years tax collection as a percentage of GDP has remained around 10%, which is one of of GDP has remained around 10%, which is one of

the lowest in the world and one of the prime reason the lowest in the world and one of the prime reason of high fiscal deficit. However, during FY14 of high fiscal deficit. However, during FY14

government has been successful in improving tax government has been successful in improving tax to GDP ratio to to GDP ratio to 10.6%10.6%, which is slightly lower than , which is slightly lower than the budgetary target of 10.9% but is significantly the budgetary target of 10.9% but is significantly

better than previous average.better than previous average.

Energy Crises

The current year’s growth of power and gas The current year’s growth of power and gas sectors remained just sectors remained just 3.7%3.7%, slightly better , slightly better

than last year’s negative growth.than last year’s negative growth.

The country still remains dependent on The country still remains dependent on thermal generationthermal generation based on imported fuel based on imported fuel

which is the most expensive and is the which is the most expensive and is the core reason for electricity crisis and core reason for electricity crisis and

circular debt.circular debt.

Employment

Unemployed workforce has increased significantly Unemployed workforce has increased significantly since 2008 and has risen to since 2008 and has risen to 3.8 million3.8 million

The un-employment rate has climbed to The un-employment rate has climbed to 6.2%6.2% The problem of unemployment continues to The problem of unemployment continues to

escalate year after yearescalate year after year

Customs Budgetary Measures

In order to encourage industrialization In order to encourage industrialization many Division exempted from whole of many Division exempted from whole of customs dutycustoms duty

Maximum general tariff rate of 30% Maximum general tariff rate of 30% reduced to 25%reduced to 25%

Exemption of duty and taxes on Hybrid Exemption of duty and taxes on Hybrid Electric Vehicles (HEVs)Electric Vehicles (HEVs)

 Sales Tax & Federal Excise

The budgetary measures pertaining to Sales Tax & Federal Excise are primarily aimed at:

Rationalization of sales tax on steel Rationalization of sales tax on steel sector, ship breakers and steel melterssector, ship breakers and steel melters

Registration of retailers on two tier Registration of retailers on two tier system basissystem basis

Restricting undue claims of input taxRestricting undue claims of input tax

Trade deficit

Pakistan’s trade deficit has increased to Pakistan’s trade deficit has increased to 61% of exports in FY14 from 28% in FY0561% of exports in FY14 from 28% in FY05

The trade gap has increased owing to The trade gap has increased owing to increase in imports of consumable items increase in imports of consumable items highest being petroleum, food and highest being petroleum, food and agricultural productsagricultural products

Workers’ Remittances

Workers’ remittances have Workers’ remittances have continued to rise contributing continued to rise contributing

materially towards foreign materially towards foreign exchange inflows of the country.exchange inflows of the country.

Thank you