Federal Medium Term Budget Estimates for Service Delivery 2019-22
The Federal Medium Term Budget Estimates for Service Delivery 2019-22 is part of the federal budget for FY 2020-21. This page reproduces the text of its 2 PDF pages, extracted automatically from the official PDF published by the Finance Division, Government of Pakistan.
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Medium Term Budgetary Statement
2020-21 to 2022-23
Government is laying before the National Assembly a Medium Term
Budgetary Statement under Section 5 of the Fiscal Responsibility and Debt
Limitation Act, 2005. This statement is consistent with the country’s overall
macroeconomic framework.
2. The year 2019-20 was projected as a year of positive economic growth
caused by target driven policies and goals.In the first half of this fiscal year, the
government took an austerity driven, revenue generating and fiscal deficit reduction
strategy. This projected the growth of GDP at 3.0 percent.During the Mid-Year FY
2019-20, Pakistan’s economy moved progressively along the stabilization and
adjustment path. A steady policy mix appeared to adequately address the
macroeconomic imbalances. Structural adjustment process picked up momentum
with the initiation of the IMF’s Extended Fund Facility program of US $ 6 billion.
3. However, the economic canvas changed drastically in the latter four to
six months with increasing effects of the Covid-19 outbreak on economy. Post Covid-
19, it is expected that the Budget Deficit will increase to around 9 percent of gross-
domestic-product.Projection of economic growth reduced from around 3% to -0.38%
of GDP, while over-all budget deficit is revised upwards from 7.1% to 9.1% of GDP,
FBR revenue loss projected at Rs 900 billion, exports and remittances were
adversely affected, and non-tax revenue was decreased. The growth rate for FY
2020 is estimated at -0.38 percent on account of subdued performance in industry
and services sector which stood at -2.64 percent and -0.59 percent, whereas
agriculture sector performed relatively better and grew by 2.67 over the previous
year. The government’s focus is now aimed at increasing public health spending and
strengthening social safety nets for the vulnerable population.
4. Over the medium-term a number of important policy measures will be
taken. These policy measures will broadly include reduction of budget deficit through
increase in government revenues, maintaining the policies of; no borrowings from
State Bank of Pakistan for budget financing, flexible exchange rate, structural
reforms in public entities including where necessary privatisation, reforms in energy
sector (electricity and gas), increase in public investments in management of water,
implementation of projects under China-Pakistan Economic Corridor, strengthening
energy transmission and distribution systems, implementation of national tariff policy,
implementation of special economic zones, etc.
5. The budget philosophy and strategy for FY 2020-21 year budget by the
government includes striking a balance between corona expenditure and fiscal
deficit, keeping primary balance at sustainable level, protection of social spending to
support the vulnerable segments of the society, successful continuation of IMF
program, keeping development budget at adequate level to inject economic growth
and revenue mobilization. Funding for special initiatives led by the Prime Minister like
Kamyab Jawan, Sehat Card, Naya Pakistan Housing scheme etc have also beenPage 2
protected.In wake of Covid-19 and additional measures by the government to
improve the economic outlook, no new taxes shall be introduced in 2020-21 budget.
FBR collection however, will increase through improvement of tax system,
broadening tax base and strengthening of administrative controls. Other measures
include withdrawing tax exemptions, rationalizing concessionary regime, simplifying
tax rules and ensuring tax compliance.
6. It is imperative that the government adopt a policy for fiscal
consolidation for debt reduction over the medium-term. However, social spending
shall continue to be focused towards helping the most vulnerable segments of the
society. Federal government is accordingly pursuing a multipronged strategy with
focus on increasing tax revenues, reducing unnecessary expenditures, spending for
the economic growth of the vulnerable sector and increasing the country’s foreign
exchange earnings.
Key Macroeconomic Indicators - Rolling Targets
Budget Revised Budget Target for
Items
2019-20 2019-20 2020-21 2021-22 2022-23
Real GDP Growth (%) 2.4 -0.4 2.1 4.0 4.5
Inflation (%) 11 - 13 11 - 12 6.5 6.2 6.0
As % of GDP
Total Revenue 16.7 14.3 15.9 16.6 17.3
Tax Revenue 14.4 11.0 13.2 13.9 14.5
FBR Tax Revenue 12.6 9.4 10.9 11.8 12.6
Non Tax Revenue 2.3 3.3 2.8 2.8 2.7
Total Expenditure 23.8 23.5 22.9 22.3 22.1
Current 20.2 20.9 20.0 19.4 18.8
Development 3.6 2.6 2.9 2.9 3.3
Fiscal Balance -7.1 -9.1 -7.0 -5.6 -4.8
Revenue Balance -3.6 -6.6 -4.1 -2.7 -1.5
Total Public Debt - (Gross) 77.6 86.8 87.0 84.2 80.7
Total Public Debt - (Net) 73.0 82.5 83.1 80.8 77.8
GDP at market prices (Billions) 44,003 41,727 45,567 50,443 55,991