Budget Speech

The Budget Speech is part of the federal budget for FY 2022-23. This page reproduces the text of its 46 PDF pages, extracted automatically from the official PDF published by the Finance Division, Government of Pakistan.

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               Budget Speech 2022-23
              Bismillahir-Rehmanir-Rahim
                      PART-I

Mr. Speaker:

1.        It is my honour to present before this august House the first Budget
of Coalition Government. The coalition had bagged more than 60% votes
in the last General Election. The representatives of all federating units are
represented  in  this Government,  therefore,  the  decisions  taken  for
country‟s economy enjoy the greater backing of entire nation.

2.    The Government is facing the  difficult challenge of deteriorated
economic conditions due to extremely poor performance during the last
quarter to four years. Last Government has been taking revenge from
Pakistan and its people continuously for quarter to four years for unknown
reasons. Social structure was badly affected because of  their short-
sightedness. Economic growth has stopped and  national  unity was
disintegrated. Poor governance had peaked during their era due to which
common  man  was  affected  badly.  Rupee  experienced  massive
devaluation, consequently price of everything skyrocketed. The  life of
poor and middle class became miserable.

3.   A naïve team had pushed the country towards disaster during the
last quarter to four years. Every year, a different person used to present
budget and every year rather during the year economic policies of the
government would change due to which confidence of investors and
development partners was shaken. Those people were master in refuting
what they had said earlier. The people of Pakistan had seen their U-turns
at every stage but as they were habitual, they continued to vary their
stances  before   international   fraternity  and   international   financial
institutions. This led to suspension of IMF programme in February, 2022
which was scheduled to complete in the same year. The fundamental
reforms which were due to take place in 2019 were not initiated.

4.    Fundamental  reforms  are  required  to  correct  the  structural
imbalances of economy. Such reforms usually face immediate public
backlash but the dividend is that the foundations of economy are set on
solid foundation. Previous government was reluctant to take such reforms.
Thus they have been pending all such reforms due to which the economy
could not stand on its feet so far, therefore, prosperity remained elusive.

5.    The incumbent government has short time. The government could
have easily passed on the buck to next Government to the detriment of

country. In anticipation, we have decided to carry out all those reforms
which will benefit to the economy and hence the country. The joining of
this government was conscious decision in the backdrop of a deteriorating
economy. We had two options; one was to leave the country in the
situation in which it was and announce new elections but that would have
ruined the economy and putting, again the country back on the track
would have been difficult. Therefore, we chose the second option and
started taking  difficult decisions. The succession of taking  difficult
decisions is still incomplete. Indeed, this is a difficult way but this is the
only path towards sustainable progress. We have done it before, we can
do it and we will do it. In-sha-Allah.

6.   We always preferred national interest against our political interest.
This  time  our  first and  foremost  priority  is  economic  stability. A
fundamental problem of our economy has been that the rate of economic
growth remained 3-4 percent which is inconsistent with the growth rate of
our population. In contrast to  it, when the growth rate exceeded 5 - 6
percent, it led to uncontrollable current account deficit. The reason behind
this phenomena is that to advance the economy we have been giving
concession to affluent classes. This used to result in increase in imports
while exports remained stagnant. This happen last year, rather the same

happened every time. Therefore, we have to adopt new thinking and we
will have to find a solution as a nation. To run economy forward incentives
have to be given to our middle and poor classes which  will result in
increasing  domestic  production,  in  turn  leading  to  improvement  of
agriculture.

7.   We will have to improve the economic situation of the poor and
assist them so that their income is increased. When the income of the
poor  increases,  they buy goods and  services which  are produced
domestically. Expenditures on such consumer goods do not result in
increasing imports but  the development process gets  initiated  in a
country. By doing so, we can achieve sustainable and inclusive growth.

8.   We will have to lay the foundation for economic growth. A sound
foundation upon which a splendid edifice of sustainable growth can be
constructed and which stays there with all its glory. We will have to focus
on increasing exports as our growth formula. We will have to increase our
Agricultural, IT and  Industrial exports. We  will have  to increase the
produce of our agriculture and will have to increase the competitiveness
of our exports so that it can compete with the products of other countries
in international market. We  will have to enhance the ease of doing

business to attract local and foreign investors. After importing machinery
and raw material we will have to work for their value addition thereafter. In
this way our volume of export will exceed than that of our imports.

Economic Situation and Planning

Mr. Speaker!

9.    Every one knows that we are facing the challenge of putting a
wrecked economy back on track. There has been economic instability
during the quarter to four years. Historically high prices, foreign exchange
problems, reckless borrowing on high rates, load shedding coupled with
last government‟s failures to mitigate these problems have made the lives
of people very difficult and miserable.

Mr. Speaker!

10.   Owing to the bad governance during last quarter to four years,
Pakistan stood third amongst sizeable countries in high prices. Seventy
five million people are forced to live a poor life. The number increased by
20 million during the quarter to four years. During that period six million
people lost their jobs. Previous government borrowed Rs 20,000 billion
during its tenure of quarter to four years which is equal to 80% of the total

debt taken since the times of Liaqat  Ali, Khawaja Nazim-u-Din, Ayub
Khan, Zulfiqar Ali Bhutto, Mohtarma Benazir Bhutto, Main Muhammad
Nawaz Sharif  till Shahid Khaqan Abbasi and, Mr. Speaker including you
during the last 71 years. It was because they spent phenomenally more
than  their income and presented the four highest ever  deficit laden
budgets in the history of Pakistan. Their average budget deficit remained
almost 8.6%. During this period our debt increased by almost Rs 5,000
billion annually and during current financial year it is expected to reach Rs
54,000 billion. Likewise the circular debt of power which we left at Rs
1,062 billion in May 2018 has reached Rs 2500 billion. Circular debt in
gas sector for the first time in the history of country has risen to Rs 1,400
billion now.

11.   During the tenure of my leader Main Muhammad Nawaz Sharif,
rise in prices had been very modest. The price hike remained close to 5
percent. The lowest level of inflation i.e. 3.9% was recorded during that
period. Owing to the poor governance of last quarter to four years, there
has been a persistent price hike in Pakistan. The former Prime Minister
used to say that he had not come into power to monitor the prices of
onions and tomatoes, rather he had come into power to make the country

great. I do not know how one can make the country great by grinding the
common man into price hike.

12.      I fail to understand as to why the prices of sugar and flour had
gone up with the beginning of Imran Khan‟s Government. In 2013, sugar
was being sold at the rate of Rs 55 per k.g and in 2018 when we left the
rate was Rs 53 per  k.g.  After 2018 sugar price sky rocketed, and
exceeded Rs 140 per k.g. Then Prime Minister Shehbaz Sharif came into
power and brought it back to the level of Rs 70 per k.g. Likewise when we
left in 2018 flour price was Rs 35 per k.g which in Naya Pakistan reached
Rs 80 per k.g. But again, Shehbaz Sharif came into power who managed
to supply flour at Rs 40 per k.g. at Utility Stores and at a number of other
specified stores. At the end of our tenure Pakistan was exporting sugar
and flour but at the end of theirs we are compelled to import three
million ton wheat this year.

13.   The prices of energy also played its role in price hiking during the
tenure of last government. We had solved the power crisis to a large
extent. The responsibility of deepening energy crises once again lies with
wrong policy decisions of PTI Government during the last quarter to four
years. They leveled concocted allegations against very competitive LNG

contract entered into by us, due to which many respectable leaders had to
face jails We could have tolerated, had they managed economical LNG
contracts. But instead of striking long term agreements at lowest rates
that were available at that time due to Covid, they opted for costlier spot
purchases. This is the reason we are compelled to buy LNG at high rates
at the moment to meet our immediate needs. Despite all this, we were
blamed and many honourable leaders, including myself, were sent behind
bars, our sisters and daughters were dragged into  it and they are  still
facing cases in courts.

14.   Towards the end of February, when Imran Khan led government
sensed that they will have to leave then, they tried to create hurdles in the
way of coalition government  , but in fact these were landmines for the
economy of Pakistan. The prices of petrol and diesel were reduced
despite the  fact  that government was running on borrowed money.
Because  of  that destructive act our country was caught  in a grave
economic situation. The rescue efforts are still going on.

15.   Keeping in view the high petroleum prices, Prime Minister Shehbaz
Sharif has decided  to  bail out  the low income  classes. Under  his
directives, it has been decided to pay Rs 2000 per month as assistance to

families having monthly income less than Rs 40,000 per month. The
decision has been implemented  w.e.f. June, 2022 and the additional
assistance   is  being  provided  to  existing  beneficiaries  of  BISP
automatically. Now 60 million more people will be added to it who will be
paid Rs. 2,000 per month. This financial assistance has been included in
fiscal year 2022-23 budget. It is not necessary to own a car or motorcycle,
people who travel in buses can also benefit from it.

16.   From 2013 to 2018 Pakistani currency remained stable but then
due to miss governance of highest order the value of Pakistani Rupee fell
by 61 percent and US dollar went from Rs 115 to Rs 189 between 2018
and 2022. Due  to aftershocks  of  this economic mismanagement,   it
crossed the level of Rs 200 by now. But we have taken all necessary
steps to stabilize our currency and we will hope that In-sha-Allah  it will
become stable.

Budget Vision and Economic Priorities

Mr. Speaker!

17.   Before going  into the  details  of Budget,  I would  like  to say
something about the strategies and priorities of our government.

18.   Prime Minister Shehbaz Sharif believes that maximum relief should
be given to the people during these hard times especially to those poor
people who cannot withstand the storm of price hike. Government has
taken many steps for providing assistance and subsidies in this respect
but in order to continue  it we  will have to provide resources. For the
purpose there can be a special tax on higher income earnings to redirect
the wealth towards poor people, so tax can be imposed on such income
or on articles which are used mostly by affluent people and are used less
by middle class or poor people. In this way higher income people will have
to face a nominal burden. Thus the rich can provide much relief to the
poor.

Mr. Speaker!

19.   The  budget  philosophy  of  our  government   is  to  increase
agricultural productivity so that not only cultivated land increases but per
acre yield also increases. Especially cultivation of edible  oil producing
crops like maize, sunflower and canola be increased so that agricultural
imports can be decreased as well as current expenditure deficit. On the
other hand, we will develop industries which products can be exported. In

this way we will have valuable foreign exchange and it will help to correct
the balance of external payments on durable basis.

Mr. Speaker!

20.      It  is imperative to improve the management of revenues being
collected currently along with exploring the avenues for new sources.  If
the theft of revenues is curbed which has increased during last quarter to
four years, we can increase revenue collection substantially. According
to an estimate tax theft has amounted to around three trillion rupees.
Prime Minister is constituting a Task Force which will take measures
to minimize this tax leakage. Moreover, we are making  efforts to
increase non tax revenues.

Austerity Measures

Mr. Speaker!

21.    Austerity  is our  first  priority when   it comes  to  expenditures.
Austerity in government expenditures is part and parcel of this budget. We
are going to take concrete steps in this regard, we are not offering lip
service. There will be a complete ban on purchase of vehicles. There will
be a ban on purchase of furniture except for development projects. Petrol

limit for government employees (officers) and Cabinet will be curtailed by
40 percent.  There will be ban on foreign visits at Government expense
except mandatory foreign visits.

Mr. Speaker!

22.   There is an allocation of Rs 530 billion in budget for next financial
year like several other countries, we are going to establish Pension Fund,
for which funds have been allocated. We are contributing ten billion
rupees in the Pension Fund being the first year of its constitution.

Macro-economic Framework

 23.   According to the vision of Prime Minister, our team has devised a
medium term macro-economic framework to put the economy on track of
growth. I firmly believe that the direction of our economy will be set right
under his vision.

24.  A gigantic challenge before us is to achieve growth without current
account  deficit. Next year at least 5 percent growth  will be achieved
without a balance of payment problem. During the next year, GDP will be
increased from Rs 67 trillion to Rs 78.3 trillion.

25.    Inflation: At present the inflation stands at 11.7% which is the
highest during the last 10 years. Government fully understands the reality
that poor people are facing too many hardships. We are trying to lower
prices by leveraging monetary and fiscal policy in a better way. Inflation
will brought down to 11.5 percent during the next financial year.

FBR Taxes:

26.    In emerging market countries, tax to GDP  ratio  is around 16
percent but in Pakistan it is 8.6 percent at the moment. We plan to raise
this ratio to 9.2 percent of GDP during next financial year. In 2017-18, we
left this ratio at 11.1 percent.

27.   Gross Deficit:   Gross deficit that stands at 8.6 percent of GDP
during the current fiscal year will be decreased gradually. In the next fiscal
year, it will be decreased to 4.9 percent. Likewise, overall primary balance
that is currently -2.4 percent of GDP, will be improved to +0.19 percent
during the next fiscal year.

28.   Trade  deficit: Our Government  is  taking  concrete  steps  to
increase exports and arrest the growth in imports so that trade balance
can be improved and price of  dollar  is corrected automatically. The
imports which  are  expected US$76  billion  upto  this  year,  will be

decreased to the level of US$ 70 billion during the next fiscal year. Our
exports are US$ 31.3 billion currently, steps will be taken to increase
exports to US$ 35 billion during next fiscal year. With these steps, current
account balance of -4.1 percent of GDP will be decreased to -2.2 percent
during next fiscal year.

29.   Remittances:  During current fiscal year foreign remittances are
expected at US$31.1 billion. It is estimated that remittances will increase
to US$ 33.2 billion during the next fiscal year.

30.         National Debt Servicing: This year total interest payment
expenditure  will be Rs 3,144  billion. Out of which domestic  interest
payment is estimated Rs 2,770 billion and external interest payment is
estimated at Rs 373 billion. In the next financial year, payments under this
head is estimated to reach Rs 3,950 billion out of which Rs 3,439 billion
will be domestic and Rs 511 billion will be foreign debt servicing.

31.    Public Debt:  Public dept in 2017-18 was Rs 25,000/- billion. In
March 2022 it rose to Rs 44,365 billion i.e. 72.5% of GDP. We decreased
the pace of borrowing by controlling expenditures in the last two months
of the current financial year. Under the law Governments borrowing limit is
fixed 60% of the GDP.

32.   Under  certain amendments  in FRDLA, 2005,  experts  will be
provided to Debt Management Office of Ministry of Finance. For efficient
functioning,  its mandate and powers  are  being enhanced so  that
management of debt can be founded on sound basis. At this moment  I
want to inform the house  briefly that previous government while re-
profiling debt, had planned to pay Rs 5,400 billion in 2029 in one go.
Imagine, can the domestic money market arrange the entire amount in
one go? Never! We are managing  this huge payment by  efficient
fragmentation of this huge amount so that government and domestic
market can honour it.

Budget Allocations

Mr. Speaker!

33.   Before giving you the salient features of budgetary allocations,  I
would like to present an overview of total revenue and expenditures.

     During current financial year, FBR revenue  is estimated at Rs
      6,000 billion out of which provincial share will be Rs 3,512 billion.
      Net Federal revenue will be Rs 3,803 billion. Federal Government
     non  tax revenue  is  expected  to be Rs  1,315  billion.  Total

   expenditure will be Rs 9,118 billion. PSDP expenditure will be Rs
   550 billion Debt servicing will be Rs 3,144 billion.

  Defence expenditure  will be Rs 1,450  billion. Running of  Civil
   Government expenditure will be Rs 530 billion and subsidies will be
  Rs 1,515 billion. Grants will be Rs 1,090 billion.

  During next financial year, FBR revenue is estimated at Rs 7,004
    billion out of which provincial share will be Rs 4,100 billion. Federal
   Government will have net revenue of Rs 4,904 billion whereas non
   tax revenue will be Rs 2,000 billion

  Federal government total expenditure  is estimated at Rs 9,502
    billion out of which debt serving will be Rs 3,950 billion and Rs 800
    billion Budget is allocated for next year PSDP. There will be Rs
   1,523 billion for defence and Rs 550 billion for civil administration
   expenses. Rupees 530 billion are allocated for pension. Rs 699
    billion are allocated for targeted subsidies and Rs 1,242 billion are
   allocated as grants which include grants for BISP, Bait-ul-Mall and
   other departments.

Benazir Income Support Programme

34.     Now  I share the steps taken for our poor and deserving
sisters and brothers. We have increased Benazir Income Support
Programme‟s allocation which was Rs 250 billion during 2021-22. In
2022-23,  this  allocation has been  increased  to Rs 364  billion.
Moreover, an amount of Rs 12 billion is allocated against subsidies for
Utility Store Corporation. An additional amount of Rs 5 billion has been
allocated as Ramzan Package.

35.      During the next financial year nine (09) million families will
have access to Benazir Kafalat cash transfer programme facility under
BISP for which an amount of   Rs 266 billion has been allocated.

36.      Benazir  Educational  Scholarship  Programme   will  be
extended to 10 million students, for this purpose an amount of more
than Rs 35 billion has been allocated.

37.     An  additional 10,000 students  will be provided Benazir
under graduate scholarship, for this purpose an amount of more than
Rs 9 billion has been allocated.

38.      Benazir  Nashw-o-Numa  (Nutrition) Programme   will  be
extended to all districts at an expenditure of around Rs 21.5 billion.

39.       In addition, six billion rupees have been allocated for poor
and the needy under Pakistan Bait-ul-Mal.

Power

Mr. Speaker!

40.      Energy is a key to people, trade and industry. During first
three months of our government, we have paid additional Rs 214
billion as subsidies to people to lessen the outstanding arrears left by
previous government. An amount of Rs 570 billion is allocated under
this head for next financial year so that common people are able to
afford expenses on power, during this harsh summer.

41.    We have  released Rs 248  billion  for  the payment  of
petroleum sector outstanding arrears and have provided Rs 71 billion
for next financial year. Soon we will announce new gas rates, under
which gas will be supplied to industries on such rates competitive with
other regional countries, so that exports will increase.

Education:

Mr. Speaker!

42.      Despite several financial constraints, and the fact that higher
education is a devolved subject, we have allocated Rs 65 billion for
Higher Education Commission (HEC) in current budget. Additionally,
there is an allocation of Rs 44 billion for development schemes of HEC
under PSDP, which is 67% higher than the previous financial year.
This is a proof of our commitment to our youth.  I am particularly
pleased to mention  that with  this funding we are going to
establish a University in North Waziristan  this year. We are
persuading provinces that they should assume more responsibility for
higher education in the coming years.

43.    HEC  budget  comprises   of  5,000   scholarships   for
Baluchistan and merged districts of Khyber Pakhtunkhwa. There is a
special scheme  for coastal regions  of Baluchistan. One hundred
thousand laptops will be given to students on easy installment all over
the country. To upgrade the engineering and technology education
funds have been provided for state of the art equipment.

Agriculture and Food Security

 Mr. Speaker!

44.       Agriculture is the backbone of our country‟s economy. Along
with other measures, we have allocated Rs 21 billion to increase crop
yield and  uplift of livestock sector. Ministry of Food Security and
Planning Commission, in consultation with provinces, have devised a
three year growth strategy. The objectives of  this strategy are to
enhance production, increase farmers‟ income, counter the negative
effects of climate changes, promote smart agriculture, self sufficiency,
value addition and agro processing.  It is pertinent to mention here
that the condition of port clearance will be abolished to facilitate
the Sindh and Baluchistan’s small scale fishermen.

Incentives for Youth

Mr. Speaker!

45.      Youth are an important asset of our country. A national
youth commission will be established. There are various schemes for
youth. An integrated system will be introduced to increase the role of
educated youth in country‟s development. Under “Youth Employment
Policy”, two million youngsters‟ access to employment opportunities
will be ensured. Young men and women will be provided interest free
loan upto Rs 5,00,000. A loan scheme on low interest rate upto Rs

25,000,000 will be introduced. There will be 25% quota for women in
loan schemes. To ensure the economic empowerment  of young
women, high-tech and other skills training will be imparted to them on
priority basis. “Youth Development Centers” will be established all over
the country.

46.     Young people  will be able to access an „Integrated Job
Portal‟ and guidance  through these  centers.  In view  of  climate
changes and  productive  activities  of  youngster, a „Green Youth
Movement‟ will be initiated. Funds will be provided for schemes on the
basis  of  merit,  free laptop on  installments  for everyone and  for
construction of 250 mini stadiums. For encouraging the youth talent
and entrepreneurship, „Innovation League‟ will be established. „Talent
Hunt and Sports Drive‟ Programme shall be devised for youngsters
aged 11-25 years.

Industry and Trade

Mr. Speaker!

47.       Industry is very important for every country. Products made
in factory are not only exported but they meet the domestic demand
too and provide livelihood for millions of people. Keeping in view its

importance, Ministry of Industries and Production, with the cooperation
of Asian Development Bank, has started work on Industrial Policy.

48.      For the last three years, payment of DLTL claim arrears has
been very slow. Prime Minister has directed to pay  all the refund
claims to exporters in the instant month immediately. At present
verified claims by State Bank of Pakistan worth Rs 40.5 billion are
outstanding. We are paying this amount immediately. It is to mention
that  a  sales  tax  was  imposed  three  months  ago  on
pharmaceutical industries. Not only this but the ironical situation
is that refunds were also not being issued to them. We shall
release refund immediately.  Likewise, despite financial difficulties,
sales  tax  refunds  are  also being  paid  immediately. To  provide
uninterrupted power supply to industries, industrial feeders  will be
exempted from load-shedding.

Investment:

49.       In order to promote investment in country, a new strategy is
being chalked out under which an investor friendly environment will be
provided  and  cumbersome  procedures   will  be  abolished.  Our
government is planning reforms in Dispute Resolution Mechanism for

citizens and foreign investors.  It  will be ensured that the dispute
resolution mechanism is economical, simple and effective.

50.       International best practices will be adopted for the purpose
which will include the alternate dispute resolution mechanism. These
reforms will be introduced in consultation with superior judiciary so that
it could immediately be implemented.

51.      Previous Government did not establish even a single new
special economic zone. Under CPEC, a lot of work on infrastructure
had been completed  till 2018 and now there is a need to use this
infrastructure  for  economy.    It  was  agreed  with  the  Chinese
Government that nine special economic zones would be established
on CPEC route, investors from China and other countries  will be
facilitated to set up factories on these economic zones. However,
previous government created many hurdles to slow down this work. By
now, despite lapse of considerable time, not a single special economic
zone could be made operational.

52.      Prime Minister Shehbaz Sharif has directed to make special
economic zones   at Rashkai  in Khyber Pakhtunkhawa, Lahore  in

   Punjab and Dhabe Ji in Sindh to be made operational as soon as
   possible by immediately providing them electricity and gas.

Promotion of Culture and Film Industry

   53.      Promotion of tourism, social diversity, for introducing culture
   and identity of Pakistan at international level the development of film,
    culture, heritage and fine arts is inevitable. In 2018,  first „film and
   culture  policy‟  was  approved  by  Cabinet  during  our  tenure.
   Unfortunately, no progress was made during the last four years. In the
    spirit of said policy of 2018, film has been declared industry. With an
   amount of Rupees one billion, „Binding Film Finance Fund‟ has been
   established and „Medical Insurance Policy‟ has been launched.

   54.       Five  years‟  tax  holiday  for  film  producers,  and  on
   establishing new Cinema houses, production houses, film museums is
   being announced and tax rebate is being given on export of films and
   dramas for ten years, as well as producers‟ income and income from
   cinemas is being exempted from Income Tax. „National Film Institute‟
   and „Post Film Production  Facility‟, and „National Film Studio‟ are
   being established with an allocation of Rupees one billion.

55.       Eight percent withholding tax on distributors and producers
is being withdrawn. The import of machinery, equipment used for
production of films, drams and other items used for the purpose shall
be exempt from Custom Duty for five years.

 Public Sector Development Programme (PSDP)

 Mr. Speaker!

56.     An amount of Rs 800 billion has been allocated for Federal
Public Sector Development Program.  In 2017-18 we  left Federal
Development Budget at Rs 1,000 billion. This time when we have
taken up the Government again, it has been slashed to almost a half.

57.      Federal government should build such infrastructure with its
funds that can benefit the whole country to the full capacity. These
people stopped the work on Gawadar Port because of their negligence
and irresponsible attitude. Gawadar, which is deepest water sea port
in the region, at present it is filled with sand and mud.

58.      PTI  government  has  also  harmed my  Quaid  Mian
Muhammad  Nawaz  Sharifs‟  vision  of  laying  and  constructing
Motorways in the country and intentionally kept motorway routs from

Chinese Boarder to Karachi and Gawadar incomplete at many points
so  that  the mechanism  of progress which was  initiated by our
Government may not bring prosperity to Pakistan.  Similarly, they
created hurdles in fulfilling Mian Muhammad Nawaz Sharifs‟ dream of
constructing ML-I on modern lines connecting the whole Pakistan.
They even did not start working on this project which could modernize
Pakistan. During his tenure of quarter to four years Imran Khan just
talked but did nothing practically. In this way after having wasted
nation‟s valuable times, he flew back to Bani Galla in Helicopter.

59.     Now   I am  going  to  present  priorities  of  development
programme:

                  i.   We will focus on completion of ongoing projects so
                  that funds spent on these projects may not go to
                waste.
                   ii.     Despite having the lowest population, comparatively
                the largest allocation is being spent on Balochistans‟
              Development so that the province can be brought at
                par with other parts of the country.

                          iii.   PSDP  allocation  for provinces and  special areas
                 (Azad  Kashmir  and  Gilgit  Baltistan)  has  been
                   increased to Rs 136 billion.
                  iv.   Dams that serve as water reservoirs are our utmost
                         priority.  Additional funds have been  allocated  for
                     timely  completion  of Mohmand Dam and  Diamir
                Bhasha Dam under the directives of Prime Minister
                Shehbaz Sharif.
                v.    Highway connecting both sea ports to China will be
                  completed.
                vi.   By expediting the completion of infrastructure projects
                and economic zones under CPEC, attention will be
                  focused on economic growth and exports. On the
                   instruction  of  Prime  Shehbaz   Sharif,  four
                knowledge parks are being established in all the
                   four provinces for which funds will be provided
               by the Federal Government.

Infrastructure

60.   As we have done  before,  the development  of  infrastructure
according to national needs is our first priority. A total of Rs 395 billion has
been allocated for this purpose.

Energy/Powers

    1. Enhancing generation, transmission and distribution of electricity is
      government‟s  priority. An amount  of Rs 73  billion has been
      provided to power sector out of which Rs 12 billion will be spend on
       timely completion of Mohamand Dam as the Prime Minister has
      announced.  These  water  reservoirs   will  also  be  used  for
       agriculture. Earlier completion of this project will benefit farmers.
      Mr. Speaker! PTI has been in power for the last quarter to four
      years but failed to reduce even one percent loss in terms of
      transmission and distribution of electricity but instead they
     ended up increasing the loss after we left when our tenure had
      ended. With the 73 billion allocation in PSDP for this sector,
    we will Insha Allah minimize these losses.

   Water Resources

    2. Water resources sector  is closely linked with power sector. An
     amount of Rs 100 billion is included in the budget for big mult-
      purpose dams especially Diamir Bhasha, Mohamand Dam, Dasu
     Dam, Nai-Gaj Dam and commend area projects. Small dams,
       culverts, in less developed districts are also given priority. Power

     and water resources projects are interlinked for which a total of Rs
     183 billion have been allocated.

Transport and Communication

    3. An amount of Rs 202 billion has been allocated for highways and
      sea ports. Communication facility not only benefits industry and
       trade  but  also  gives market access  to  farmers  but  tens  of
      thousands of people will also get employment.  It has been over
       distinction in the past that we started construction of motorways,
      completed them and today millions of people travel through these
      motorways daily. We are also utilizing private sector investment
      along with public funds for construction of highways. Construction
       of highways through public private partnership will be encouraged.

Social Sector

Mr. Speaker

    4.  Pakistan is a signatory of SDGs and is striving to achieve targets
       of SDGs. People are directly provided with civic facilities under this
      programme. To make the lives of people easy and to serve the
       underprivileged people, a hefty amount of Rs 70 billion has been

       allocated. In addition, Rs 40 billion have been allocated for various
       other schemes in social sector.

  Programmes for Education and Youth

    5.  Our government has given priority to the completion of ongoing
       projects. An allocation of Rs 51 billion in the budget for higher
      education project has been proposed.

Health

    6. An amount of Rs 24 billion has been allocated to provide better
       health services to people, control and eradicate  viral diseases,
       provision of medical equipments, vaccination and enhancement of
      the capacity of health institutions.

   Climate Changes

    7. We are not oblivious of importance of climate changes in a difficult
      time like this. An amount of Rs 10 billion has been allocated to
     meet this challenge which includes plantation and other projects for
      improving natural environment.

Science, Technology and IT

Mr. Speaker!

    8.  Government has allocated Rs 17 billion for imparting training in IT
       sector,  providing  youth  with  laptops,  improving  network and
      promotion of IT exports.

Agriculture and Food Security

    9. An amount of Rs 11 billion has been allocated to modernize the
       agriculture sector and enhance the role of machines, lazar leveling
       of land, modernizing the irrigation, provision of quality seeds and to
      promote the exports of agriculture products.

Industry and Agriculture Produce

   10. Projects  to  provide  essential  infrastructure and  services  for
       special economic zones are included in next year‟s schemes so
       that market share of these sectors in domestic and international
      market can be enhanced. An amount of Rs 5 billion has been
       allocated  for  exports based on  value  addition  of  technology,
      mineral and other industrial sectors.

     An amount of 20 billion has been allocated for K-4 project in
      Karachi.

                            PART-II

                       (FBR Part I)

Mr. Speaker,

61.   The guiding principles for this year‟s taxation policy are:

   1    More emphasis on Direct Taxes namely Income Tax & Capital
         value Tax.

   2     Taxing the unproductive assets

   3     Taxing those who made exhorbitant profits (windfall gain)

   4     Protect the productive assets and

   5     Bring equity through the distribution of wealth by taxing the
          wealthy.

62.   As everybody knows  that  Pakistan‟s  investment  climate and
taxation  structure  do  not  encourage  entrepreneurship.  Rather    it
discourages new businesses and encourages investment in real estate.
This is a multi-faceted menace. It is anti-growth.

63.      It causes an artificial increase in the prices of real estate taking
housing  facilities out of the reach of the middle classes. The money
generated from this dead investment is a major source of inflation and
social disharmony. We don‟t want to discourage the real estate sector but
we want to steer this sector in a direction where it can become the engine
of growth for cities. Our proposals aim at encouraging construction, and
vertical growth, and discouraging speculative investment in open plots.

64.   This  Government   intends   to   create  a   business-friendly
environment. It has been unfortunate that the major thrust of recovery of
income tax has been through withholding taxes. Adding fuel to fire, the
presumptive tax regime that is largely run through withholding taxes has
transformed its character from direct to indirect tax. Thus withholding tax
regime has become inflationary in its nature. Moreover, it not only creates
distortion in the taxation structure but also reduces the ease of doing
business. This government aims at correcting this. We aim at reducing
withholding taxes, converting final taxes to minimize taxes, and minimum
taxes to adjustable taxes.

Mr. Speaker,

65.      I now present proposals regarding income tax relief measures:

    (i)   The tax rate on salaried individuals

       The basic threshold of taxable salary  is proposed to be
       enhanced to 12 lac from the current 6 lac rupees for salaried
          individuals. This would pass tens of billions of rupees benefit
          to salaried people. This will generate a positive economic
         cycle whereby  this money would get transferred  to the
        businesses as the disposable income of salaried people
         increases therefore ultimately, the government will benefit
        through the thriving of the business, the creation of more
          jobs, and tax revenues in the future.

(ii)     The tax rate for Business individuals and AOPs

          In the face of inflation, the basic threshold of exemption for
        business individuals and AOPs is proposed to be enhanced
        from 4 lac to 6 lac.

(iii)     Reduction in the tax rate on Bahbood Certificates

         Currently  profit  from  investment  in  Behbood  savings
           certificates,  pensioners  benefit  accounts, and Shuhada
         family welfare accounts is taxed at a maximum rate of 10%.

          In order to provide further relief to pensioners,  it shall be
        taxed at a maximum rate of 5%.

(iv)     Fixed Tax Regime for retailers

      A fixed tax regime  for small retailers  is being proposed
        wherein tax will be collected along with electricity bills along
         with  simplified  registration  and  reporting  regime.  The
        proposed tax will range from Rs.3000 to Rs.10,000 and this
            will be a final discharge of tax liability.  I can reassure the
        business community that FBR  will not probe further after
        payment of the fixed tax by a retailer.

   (v)    Admissibility of 100% depreciation

          Industrial undertakings and other businesses are allowed to
         adjust 50% of depreciation charges in the first year. This is
        causing  additional  burden  and   difficulty  for  industrial
         undertakings.   I  propose  to  allow  adjustment  of 100%
         depreciation.

   (vi)   Admissibility   of   tax   collected   from   industrial
        undertakings at the import stage

Mr. Speaker,

     Advance income tax on imports  is collected under the Twelfth
      schedule on the classification of goods into plant & machinery, raw
       materials,  and  finished  goods.  Certain  finished  goods  so
      categorized are used by industrial undertakings as raw material.
     They are not able to adjust this tax. It is causing a crunch in their
      working capital and this is an anomaly in the law.  It is proposed
       that industrial undertakings be allowed to adjust tax deducted at
      the import stage on all materials.

           I now present proposals for an equitable taxation structure with a
      pro-poor  bias and  encouraging  investment  in  the  productive
      sectors of the economy. Moreover, my proposals focus on taxing
      the rich and unproductive sectors.

(vii)  Tax on deemed rental income

Mr. Speaker,

   The major part of the wealth of rich people is parked in the real estate
    sector in Pakistan. This is a double-faceted menace. It leads to the
    accumulation of unproductive assets and raises the prices of housing

     for the poor and lower-income groups. We intend to correct this
    imbalance.  Therefore,   all  persons who  have  more  than  one
    immovable property exceeding Rs.25 million situated in Pakistan shall
   be deemed to have received rent equal to 5% of the fair market value
     of the immovable property and shall pay tax at the rate of 1% of the
     fair market value of the said property. However, one house of each
     individual will be excluded.

(viii)  Tax on transactions of immovable properties

     The current challenging times in Pakistan warrant huge sacrifices
      from the rich and affluent.  It is about time that the privileged and
       affluent sections of society must come forward to play their pivotal
       role in the socio-economic development of Pakistan. We intend to
      provide a taxation structure where all classes of assets are taxed in
     an equitable manner. Unfortunately, our present taxation regime
      provides incentives for unproductive investments and taxes heavily
      the productive sectors. In order to correct  this, capital gain  all
      classes of assets is now proposed to be taxed at 15% in case, the
      holding period of such property is one year or less. The capital gain

      payable on such assets will reduce to zero after a holding period of
     6 years, reducing tax liability by 2.5 % with each subsequent year.

      Furthermore, the advance tax rate on the purchase and sale of
       property for filers  is proposed to be enhanced to 2% from the
       current 1%.  Moreover, in order to discourage the undocumented
      economy, the advance tax rate for buyers of immovable property
     who are non-filers is proposed to be enhanced to 5%.

(ix)   Tax on High Earning Persons

Mr. Speaker,

      Pakistan is passing through unprecedented economic conditions. It
        is a time that our rich should come forward and pay taxes. In order
       to shift the tax burden from poor to rich, all persons inclusive of
      companies and associations of persons, earning an annual income
       of Rs. 300 million or more, are proposed to pay 2%tax.

(x)    Increase in advance tax on luxury vehicles

       In continuation of our policy to shift the burden of tax on the rich
       class, advance  tax on  motor  vehicles  exceeding 1600cc  is
      proposed to be increased. Furthermore, advance tax shall also be

       collected at the rate of 2% of the value in cases of high value
       hybrid and electric vehicles. Additionally, the rate of tax for non-
        filers shall be enhanced to 200% from the current 100%.

(xi)   Tax on windfall profits

     The banking sector has earned windfall gains due to higher interest
       rates and risk-free investment in Government securities. In order to
      capture the real tax potential, the tax rate on banking companies is
      proposed to be enhanced to 45% from the current 39% inclusive of
      super tax.

           I now present proposals regarding streamlining and enhancing
      documentation of economy

(xii)   Criteria for becoming tax resident in Pakistan

       Criteria for the resident person for the purpose of taxation are
      being modified. The current regime is being misused by wealthy
       individuals whereby they are not tax residents of any country
       therefore it is proposed that any citizen of Pakistan who is not a tax
       resident of any other country shall be treated as a tax resident of
       Pakistan.

(xiii)  Advance tax on international card payments

     Advance withholding tax at the rate of 1% for filers and 2% for non-
        filers shall be collected from persons remitting money outside
      Pakistan through credit, debit, and prepaid cards. However, this tax
       shall be adjustable against tax liability.

(Sales Tax & Federal Excise Measures

Mr. Speaker,

66.   Coming to indirect taxes, Inland Revenue collection has shown a
healthy growth in the overall tax collection of FBR.

67.   Keeping in view the requirement of meeting the fiscal deficit,  it is
imperative that the government takes tough decisions for the overall
benefit of the country and the government under the leadership of PM
Mian Shahbaz Shareef has  practically demonstrated  that   it has the
capacity and will to take such decisions. Sales Tax is the backbone of
revenue collection. But as per the vision of the PM, the present budgetary
proposals aim to tax the sectors that have either remained out of the tax
net or hovered in the periphery and not paid taxes as per the actual
capacity.

68.   While the government wants to collect its due share of taxes by
broadening the base and focusing on previously un-attended sectors, in
tandem with the vision of the PM, the government also wants to extend
due relief in taxes, the effect of which will trickle down to common man.

69.   Pakistan  is  suffering from acute shortage  of energy. Thermal
energy is expensive due to skyrocketing fuel prices. Renewable energy is
the possible way forward. It is proposed to exempt import and local supply
of solar panels from sales tax. Besides, consumers using fewer than 200
units of electricity will be facilitated in obtaining soft loans on easy terms
from the banks for the purchase of solar panels. This will not only promote
eco-friendly use of energy but also save precious foreign exchange spent
on the import of fuel and gas.

70.    In order to facilitate agriculture, it is proposed to withdraw sales tax
on the supply of tractors, agricultural implements, and various seeds
including wheat, rice, maize, sunflowers, canola, and rice.

71.    Charitable  hospitals are  contributing  substantially  to  providing
health facilities. It is proposed to extend complete sales tax exemption on
import/ donations to charitable hospitals and  local supplies including
electricity to charitable/ non-profit hospitals with 50 or more beds.

Mr. Speaker,

72.    In order to facilitate taxpayers, some fundamental changes are
being proposed in the Alternate Dispute Resolution mechanism through
which a taxpayer whose tax liability is Rs.100 million or more, can benefit
from the proposed mechanism. In this new mechanism, a taxpayer can
nominate his own representative while the second representative will be
the Officer of FBR. However, the third representative of ADRC will be
nominated by mutual consultation of FBR and the taxpayer. Therefore, in
this mechanism, two of the three members of ADRC will be nominated
with the consent of the taxpayer. Not only the question of fact but also the
question of law can be brought for resolution before the ADRC. The
decision of ADRC will be made by the majority. Therefore, I invite all the
eligible  taxpayers  to  benefit  from  the  proposed  dispute  resolution
mechanism. At the same  time,  I also welcome the  entire business
community to withdraw their cases pending with various courts and joint
ADRC to settle disputes through this new mechanism. This will not only
lessen the burden on the courts but also  contribute  significantly  to
taxpayers‟ facilitation.

               (FBR Part II- Pakistan Customs)

Mr. Speaker

73.    In this budget, the government is striving to strengthen agriculture.
Various relief measures have been taken for farm mechanization and
logistics. In order to give relief to the agricultural sector and farmers of the
country, Customs  duties exemption have been extended  further on
agricultural machinery pertaining to irrigation, drainage, harvesting/post-
harvest  handling  and  processing,  greenhouse  farming,  and  plant
protection equipment as well as machinery, equipment, and other capital
goods for miscellaneous agro-based industries.

74.   To  provide a  boost and  further  strengthen  to  the  industrial
economy, Customs Duty, Additional Customs Duty, and Regulatory Duty
on  around  400   tariff  headings  pertaining  to  different   industrial/
manufacturing sectors have been rationalized. Out of these, taxes are
being decreased on 350 items.

75.   The  Regulatory  Duty(RD)  regime  has  been  reviewed  and
Regulatory  Duties on  multiple  items have been  either reduced  or
removed. However,  it is also important to mention that in many cases

Regulatory Duty was imposed with the intention to protect the local
industry.

76.   The Textile sector being the backbone of the economy, merits
special attention, therefore, the tariff structure has been rationalized for
synthetic filament yarn to meet the long-standing demand of the sector.
77.   Furthermore, in view of the sensitivity of the pharmaceutical sector,
more  than 30  Active  Pharmaceutical  Ingredients  (API) have been
exempted from customs duties. Furthermore, raw materials of the first aid
bandages manufacturing industry have also been exempted from customs
duties so as to reduce the cost of local production of this important
medical item. Besides, multiple exemptions/concessions in tariffs have
also been given to many other sectors.
Mr. Speaker! Cigarette sector pays a lot of taxes. We have started to
apply tax track and trace system in this sector. We have applied this
system on three cigarette companies and intend to apply it this year
on still more. We have increased tax on them. We will increase tax
collection from this sector from 150 billion to 200 billion this year.
Mr. Speaker,
78.    All the above budget proposals, indeed, aim at strengthening the
national economy and  also promoting a  transparent,  effective, and

equitable tax system that ensures taxpayers‟ facilitation and ease of doing
business in the country.
                              PART-III
                    RELIEF MEASURES
Mr. Speaker
79.         Despite the fact that country is facing a severe fiscal crisis,
we are aware of the hardships faced by government employees. Price
hike has affected the household expenditures badly, especially that of
salaried class but in spite of the severe fiscal difficulties and lack of
resources, salaries of government employees are being increased by
15% in order to improve their purchasing power. Moreover, it was the
long lasting demand of the government employees to merge the
adhoc relief measures in their basic pay. This demand has also been
accepted.

Concluding Words
Mr. Speaker!
80.   Everyone knows that our economy is under severe pressures. But
everyone knows  that we always preferred  to serve the nation. The
coalition government will eagerly sacrifice for coming out of this crisis. We
promise that with public support and blessing of Allah we will stabilize the

economy. In the end,  I appeal the whole nation that considering the
situation of our homeland,  it is the responsibility of every citizen to play
his/her role in progress of our country. We will have to prove that we are a
living nation.
                        May Allah Almighty Protect and help us
                                   Long live Pakistan!