Pakistan

Budget 2015-16: Finance Minister Ishaq Dar unveils Rs4.451 tr budget

New budget is expected to focus on spurring economic growth

Web Desk June 05, 2015

ISLAMABAD: Finance Minister Ishaq Dar presented the budgetary proposals for financial year 2015-16 before the National Assembly on Friday.

The new budget, with a Rs4.451 trillion outlay, is expected to focus on spurring economic growth and attracting investment.

The National Economic Council has already approved Public Sector Development Programme of Rs700 billion for the next financial year.

The country will target growth next year of 5.5% when it unveils its 2015-16 budget, with historically low interest rates and infrastructure spending expected to fuel the fastest expansion since the global financial crisis.

Read: Budget 2015-16: Govt eyes 5.5% GDP growth next year

100% increase in tax on mobile handsets

Beginning July, prices of mobile phones will increase by up to Rs1,000 as the federal government has proposed to double the general sales tax (GST) on all types of imported mobile phones.

Read the full story here

Capital gains tax imposed on sale of shares

For shares sold after two years, the rate of tax would be 7.5%. Previously, shares sold after a holding period of two years were exempted from tax.

For shares sold between 1-2 years, the rate would be 12.5% — increased from 10%. While, for shares sold within a year, the rate would be 15%.

Read the full story here

Government expects to receive Rs382b from oil and gas

Keeping in line with the fall in international crude prices, the government has cut the target of revenue collection from the oil and gas sector to Rs382 billion for the next fiscal year 2015-16.

Read the full story here

Minimum wage increased to Rs13,000

Minimum wage has been increased from Rs12,000 to Rs13,000.

Tax exemptions for airlines, airports

The government announced tax exemptions on import of aircraft, their spare parts, training simulators and equipment used in repair and maintenance of airplanes in a bid to stimulate Pakistan’s flagging aviation sector.

Read the full story here

Salary tax rate reduced

For salaried individuals making between Rs400,000 to Rs500,000 annually, tax rate has been reduced from 5% to 2%.

Meanwhile, FBR’s authority to give tax exemption has been revoked.

Further, federal excise duty on cigarettes has been raised by 5%.

Read the full story here

Additional tax on high electricity bills

An additional 10% tax has been imposed on electricity bills above Rs75,000 per month.

Additionally, the government has announced a further reduction of 32% in consumer subsidies, particularly on energy supplies, in the budget for next fiscal year.

Read the full story on subsidies slashed here

Pension increased by 7.5%

Pension has been increased by 7.5%.

Forex reserves to stand at $19 billion by end of year

“Forex reserves will be $19 billion by the end of this year,” the finance minister said.

Rs20 billion allocated for PM’s special schemes

Rs20 billion allocated for special schemes launched by the prime minister. These include provision of laptops, business loans and interest-free loans, among others.

Markup rate of Business Youth Loan Scheme reduced to 6%

Markup rate of Business Youth Loan Scheme has been reduced from 8% to 6%.

Rs600 billion allocated for farmers

“We are working for the uplift of the agriculture sector and for this purpose a Credit Guarantee Scheme will be initiated,” Dar said.

“Moreover, crop loan insurance and livestock insurance schemes will be launched.”

Dar announced for this purpose Rs600 billion have been allocated as compared to Rs500 billion in the previous year.

Read the full story here

Fiscal deficit to be contained at 5%

The fiscal deficit is said to be restricted at 5%.

Rs 20.88 billion allocated for health

Rs 20.88 billion have been allocated for health.

Rs71.5 billion allocated for education

Rs71.5 billion have been allocated for higher education, 14% more than the previous year.

Rs3 billion allocated for Ramzan package

Further, Rs3 billion have been allocated for Ramzan package.

Green Line Metro Bus for Karachi

Dar announced Rs16 billion has been allocated for Green Line Metro Bus service for Karachi, to be completed by December 2016.

Rs3.5 billion for security for CPEC route

In the new budget, an allocation of Rs3.5 billion is given to Ministry of Interior for raising 28 Civil Armed Forces Wings for ensuring security for CPEC route and Chinese working in Pakistan.

Rs78 billion for Pakistan Railways

A sum of Rs78 billion has also been given to Pakistan Railways.

The Higher Education Commission has been given Rs20.5 billion, Rs4.5 billion less than this year’s HEC development budget.

An amount of Rs23.2 billion has been given to Kashmir Affairs and Gilgit Baltistan and Rs19.7 billion to State and Frontier Region’s Division.

The government’s planning to implement CPEC projects seems haphazard, as the allocations for CPEC were changed for the third time.

Rs100 billion for TDPs

Government proposes Rs100 billion allocation out of the development budget for special development programme for Temporarily Displaced Persons and Security Enhancement.

PAEC budget reduced

Pakistan Atomic Energy Commission (PAEC) budget has also been reduced from Rs59.3 billion to Rs30.4 billion for the new fiscal year.

Rs31 billion allocated on water management

“We are investing a sum of Rs31 billion on water management,” Dar added.

Rs112.28 billion allocated for WAPDA

Rs112.28 billion have been allocated for the Water and Power Development Authority for fiscal year 2015-16.

Govt allocates Rs700 billion for development spending

EXCLUSIVE: Amid last-minute changes to accommodate the prime minister, the federal government has allocated Rs700 billion for Public Sector Development Programme for the new fiscal year –up by 29% or Rs158 billion over outgoing fiscal year’s revised budget.

Accommodating the PM: Govt allocates Rs700 billion for development spending, up 29%

Rs25 million have been allocated for scholarships

Further, Dar announced Rs25 million have been allocated for scholarships.

Rs102 billion allocated for Benazir Income Support Programme

Regarding the Benazir Income Support Programme, Dar said during 2014-15, it stood at Rs40 billion, however, it was later raised to Rs57 billion and now Rs102 billion rupees are being released for it.

'Electricity growth of 19,600MW expected by 2017'

“We are expecting an electricity growth of 19,600 megawatts by 2017,” Dar added.

He said the government is working on projects, including those to produce power from LNG.

“Work on dam projects such as Diamer and Dasu and others is also underway.”

Dar makes case for strong economic growth

Finance Minister Ishaq Dar cites an Express Tribune story to prove case for strong economic growth.

Read: Shift in focus: Rise of Pakistan just a matter of time, says David M Darst

“According to an analysis by Goldman Sachs, Pakistan, currently ranks 44th in world economies and will become the 18th largest economy by 2050,” Dar added.

“Standard and Poor as well as Moody's have termed Pakistan's outlook positive.”

“Efforts afoot to restrict fiscal deficit to 5% while during the 2015-16 period this will be restricted to 4.3%,” the finance minister said.

Rs700 billion allocated for Public Sector Development Programme

Amid last-minute changes to accommodate the prime minister, the federal government has allocated Rs700 billion for Public Sector Development Programme for the new fiscal year –up by 29% or Rs158 billion over outgoing fiscal year’s revised budget.

'Will achieve the target of 5% by June 30, 2015'

Finance Minister Ishaq Dar presents federal budget for the year 2015-16.

“Government had vowed to wrong economic pundits and our economic ship is safe now,” he said.

“We have to save Pakistan from defaulting,” the finance minister said, adding the country has to achieve macro-economic stability.

“We will achieve the target of 5% by June 30, 2015,” he upheld.

“We’ve put a dwindling economy on the path of progress,” Dar further said.

“GDP remained at 4.24 % and depicts persistent growth,” he added.

Further, the finance minister said, “Prices of commodities and oil were controlled.”

“Unusual and prolonged winter season resulted in the damage of rice production and large-scale manufacturing and production saw a decline,” he added.

Read the full text of Dar's speech here

PM Nawaz arrives at Parliament

Prime Minister Nawaz Sharif has arrived at the Parliament.

Budget to be announced shortly.

Key budget 2015-16 sections

COMMENTS (33)

maqsood kakar | 8 years ago | Reply it is almost satisfied budget comparatively. inflation rate has been anticipated to be reduced to 4.5% and it is favorable for consumers who are conscious with respect to prices of commodities. interest rate also reached to the lowest so these are the pleasant outcomes of the economy

Afzal | 8 years ago | Reply

I will stop depositing whatever cash I used to save in my Bank account from now on and save 0.6% on its withdrawal

VIEW MORE COMMENTS

ghulam murtaza | 8 years ago | Reply CAN A GOVERNMENT SERVANT RENT A HOUSE IN HOUSE RENT ALLOWANCE GIVEN BY GOVT OF PAKISTAN.

Engr. Iqbal | 8 years ago | Reply You have to increase the educational budget. When everyone is educated, then there would be no cruption, no robbery. Then everyone knows his responsibility.

Abdulla Ali | 8 years ago | Reply it appears an election oriented budget,local bodies in Punjab,sind-judicial commission may announce national -general reelection.it aims to bolster big business,industrialists,shopkeepers and virtual starvation for 18 crore poor and sdafaidposhs.imagine in bahbood fund much less those having deposits upto 7-8 lak should had been compensated by giving them better returns ,the benefit has been given to rich who can enhance their bahbood deposits to 40 lakh.ishaq dar-sharifs r ruthless tyrants and 'nodulati turning into multi trillionaire overnight.they r tyrants,merciless and enemies of poor.they think themselves kings.this budget will not meret its goals aimed to kill poor and safaidposh.furthermore,budget ritual is all fraud since repeated mini budget by finance ministry,neppra,pepco,ogra etc keep coming.it is all coercive,sikhashahi,jagashahi of nudulatis rich

yasir ibrahim | 8 years ago | Reply good budget but less focus on livestock sector is not a good thing which is contributing almost 54% share in agriculture sector.as a sub sector of agricuture sector.

Hafeez | 8 years ago | Reply Misleading comparison: The defense get budget allocation only from the federal budget, whereas sectors like education, health, infrastructure, energy, etc, get big allocations from each provincial budget, e.g., last year Punjab allocated 273 billion for education, 122 billion for health, spending around 1 billion dollars on Solar projects, 150 billion for road construction , etc....For fair comparison, to each sector all allocations from all sources (Fed + Provinces) shall be taken into account and then see how all this compares with the defense budget..

Assad Choudhry | 8 years ago | Reply No one seems to understand that when running a country you must think like a buisness and throw humanity out the door. By focusing money on development and defense the country will be allowing for a safer and cleaner enviornment which will attract more people to Pakistan. The metro projects and etc will give the government more money as well as give the public more jobs. By doing all this first and then focusing on education then at least when our students graduate they will have actual jobs to go to. If the government focused primarily on education right now all the students who do graduate would have no jobs and be less willing to work low end jobs because they have degrees. This making a worse situation for our country. I feel the government is moving in the right direction, although it does hurt my heart that we must turn our heads away from the education sector of our country for another year.

MUHAMMAD DILSHAD | 8 years ago | Reply budget for railway is 78 b but total budget for education is 70b what they want? first of all there is need to give attention on the education sector. 20b for schools and 50b for hec in the previous budget there were also 20b fir school edu

john | 8 years ago | Reply Bad move and here are the reasons: People will stop depositing money in the bank and bank will have limited cash for credit circulation This will eventually cause cash shortage, and government will have no account of how many notes are in circulation and where and with whom. To ease the cash shortage government will eventually print money on guess work of notes in circulation creating inflation. The increase in tax to withdraw ones own money entrusted to the bank is unethical and government has no legal right to say how and where One should deposit ones own money. If one keeps the money under mattress he or she will save 0.6%. It is his or her money so they can keep where they want. What is so special about bank that penalizes one for withdrawing his or her own money? This is a root cause of black money and a way out for storing black money. The increase in bank rate tells that the government is desperate for cash revenue. If I were a Pakistani I would bury my money and save 0.6% or lend it on the street money market to make it grow. Stream line the tax revenue collection rather than penalizing the savers. Credit circulation through banks is vital for money circulation and accounting. This approach is a desperate measure for tax revenue with unintended consequences. Cash supply in banks will be shortened where as SBP will have no actual data for printing of currency notes. This will lead to inflation. If a common man like me understands the same, then why not our Finance Ministry. this is ridiculous how can they take tax from now bank transactions apart from withdrawing cash the business will suffer heavily as people will not be willing to pay via bank instrument then would prefer to pay in cash like in portion which will slow down the transactions to avoid paying 0.6% transaction / withdrawing tax.According to sources, people who file their income tax return will still be paying 0.3% withholding tax, underscoring that the government wants to use it as a revenue spinner and does not seem to be in a mood to withdraw the levy from those who are tax-compliant. Such measures (indirect taxes) will earn Rs 15 – 20 billion, but the huge budget deficit will not be resolved unless tax base is increased. Consider that interest cost of Pakistan loans next year will more than Rs 1,000 billion. Now think how many indirect taxes will be needed to earn that much? Passing on Govt inefficiency to existing tax payers is unfair. When a ship goes down, the captain should go down with it, but in our case the captain will flee to foreign lands and we will be left to sink on our own. Banking sector will go down which will severely hurt a sector which will and does provide job avenues to educated class in this country. A totally bad move, this should be revoked as for 15 billion sake losses will be more then 100 billion according to rough simple estimate. No economy or sub economies can be documented fully. It is futile exercise. What we really need to account is what the bureaucracy doing with the money from taxation in public interest. We need to document how much money is being spent on public interest rather than eaten away in Islamabad. The Pakistani Citizen taken on with increase taxation at whim of Federal government. This going to cause serious damage to banking and money in circulation. You dont tax the corrupt and try to take savings from the working class will certainly alienate the larger section on the whole

Fazal Hussain | 8 years ago | Reply Why Atomic Energy budget is reduced. Does Dollar Dar don't know the importancy of Atomic Energy grow. Why he is taking risk for Pakistan safety instead allocating Hugh amount for Nawaz Sharif personal use badger. Be Pakistani!

Usman | 8 years ago | Reply 78 Billion is allocated for railways.. only 20 billion for HEC only 20 billion for health.... what a balanced budget it is!!!

Asad Rizvi | 8 years ago | Reply @Muhammad Sadiq This is not a kids forum. To participate in such debats you need to raise your level. For a country where drop out percentage is more than 40, over 30 pct schools without roof & toilets, infrastructure needs to be addressed in urgency. Modern theory suggest that for a nation to progress more emphasis should be given to schooling to strengthen the base system rather than spending more money.

Amjad Rehman | 8 years ago | Reply They just not only ignored health and education sector but also removed subsidy on wheat for Gilgit Bultistan.Which demonstrate their unjust and discriminatory policies against the downtrodden people of G.B.

Mushwara | 8 years ago | Reply If only our defence budget was not so high...

M.F Maqsood | 8 years ago | Reply It was a tridional N Leage budget. pro-elite class and bussines class... nothing for poverty eradication.As far as the target of economic growth is concerned it will be proved as a bubble because govt is not concerned with the real variables alongwith education and health. Is this era we are in need of budget allocation for education upto 10 perceng of GDP. On other hand govt is reluctant to bring elite into text net. Govt should change her prorities.

H Chaudhry | 8 years ago | Reply @Daddy Go try to read numbers and take averages. There is no solution to your and others negative nature and whining all the time. It is what it is and yes defense is taking too much from budget. The roads and underpasses and all other infrastructure spending stimulates economy, make money move and change hands but for that you need to know macro economics and not cryinh all the time. If you dont like this, use your vote for what you think is right in 2018, for now, either live with it or get going. No one cares what you think!

Zulfiqar Alam | 8 years ago | Reply This one is an unbalanced budget,there is nothing for poor,working or middle class(the back bone of any economy).Only a specific industrialist group will get benefits.All the tax exemptions reflected in this budget goes for the capitalists as they are still out of promised tax-net.Mid level public servants will definitely go on strike and then another 2.5% adhoc relief will be given.

khurram | 8 years ago | Reply where is jobs announce? where is less unemployement? where is less poverty people very bad budject not required construction required is jobs rozgar educated youth boys & girls where is after complete study shaaaaaaaaaaaaaaaaaaaaaam of this budjet.

Daddy. | 8 years ago | Reply @H Chaudhry: Only a goof would say that and you are no goof but a genuine Chaudhery I suppose.Not Defence but Overheads, Underpasses, Metros, Publicity and kickbacks take the major part of this poor country's Budget.

kamran Rashid | 8 years ago | Reply budget 2015-16 are balanced but not poor friendly. it should be raise to education sector as well as IT. simply the budget 2015-16 does not cover to the poor financial and social relief. I personally accept do something is better but nothing!!!

Saif | 8 years ago | Reply "The Higher Education Commission has been given Rs20.5 billion, Rs4.5 billion less than this year’s HEC development budget." Clearly it shows that they are least interested with the education level in the economy. Pathetic!

Abdullah | 8 years ago | Reply only 25 million for scholarships......education???

Muhammad Sadiq | 8 years ago | Reply @ Asad Do you expect people to read such a long comment....Make it short and simple! The thing that concerns me the most is that the smallest percentatge of budget is allocated to HEC. You need to spend more more more on education.

asad rizvi | 8 years ago | Reply Pathetic ! It is important to understand the real issues. Current situation has arisen because respective governments during their tenor remained focused on managing their books. I have frequently raised occurrence of this problem through my columns, which is caused by deviating from established Standard Financial Procedure, commonly known as Creative Accounting. Evidence of weak economic policies of past and present is clearly visible, resulting increased government borrowings, almost halting private sector growth. This is why shamefully Central Banks profits is either at par or have exceeded private sector lending, as banks are forced to make investment in government paper. Take a look at another example that why credit expansion has thinned down despite SBP's constant liquidity injection. Commercial Banks portfolio of advance/deposit ratio (ADR) of past few years is clearly tilting downwards hitting Rs 8.747 Trillion versus Rs 4.472 Trillion, which is 51.13 pct. The drop in ADR by almost reached 22 pct in last 10-year is another valid proof of weak fiscal and monetary policy, responsible for rising unemployment and poverty rate, low revenue collection and high fiscal deficit that helped to push inflation and Discount Rate at extreme highs. The proof of the pudding is in the eating. Here is the economic disconnected and to determine the total damage caused to the economy can be derived from country's total debt that has breached 60 pct limit. In 2005 total debt (external and domestic) was Rs 4.191 Trillion. In 10-years time, by the end of FY 2014-15, Pakistan's total debt has surged by Rs 14.352 Trillion to Rs 18.543 Trillion. Then (2005) annual cost of debt servicing was Rs 300 billion against FY 2014-15 (current) cost of Rs 1.2 trillion (approx). Sharp surge in Debt to GDP ratio is alarming that was brought down from 88 pct in 2001 to 57.8 pct in FY 2006. But since then it is constantly climbing and has comfortably breached the 60 pct benchmark debt limit, to hit the highs of 63.8 pct (current), which is in violation of fiscal responsibility act. So where do we stand now and what needs to be done? The end result of this obnoxious policy is that the annual population growth is nearly 4 million. Recently released jobs data shows surge in unemployed rate to 8.3 pct or 5.3 million people do not have jobs. In true sense more than half of the population is homeless, which means based on housing residential density @ 6.5 people per family, there is a shortage of 15 million homes that have proper roof. There is lot of talk about energy sector that will change life of a common man sounds good and is encouraging. But cost of adding another 10.000 megawatt (mw) of electricity by using coal would mean that for gasification purpose, generators will be used. Here is a double catch, as increased funding will be required to operate generators and secondly what is the strategy to halt rise in Circular debt, which then would surpass Rs 500 marks? Nothing can be achieved without documentation of economy, which is mother of all the ills. It is a sheer joke that instead of spreading the web of tax net old formula of withholding tax was the preferred choice number of tax payers are 840.000 with registered tax payers a little over 3 Million. Indirect taxation is not the solution. And what is most disheartening is that despite continuation of economic woes for years, more than 50 pct of the budget committee members or budget experts were same old faces that we have been witnessing since last many years. Then the real question is that why there is so much of hue and cry, blaming policies of past governments when the present government itself is not keen to bring the required changes? What positive alteration will the same old faces bring for the well being of the people? Why respective governments are always shy to add new team of experts to bring new ideas to transform and improve the economic condition? For how long will the nation be fooled/trapped for the economic adventurism, which is bound to bring more misery than relief?

London Banker | 8 years ago | Reply Laughed at the budget so loud that other people on the floor thought a competitor bank had crashed.

H Chaudhry | 8 years ago | Reply Good budget. Getting back on legs is hard part. Defense still takes the largest part of budget. The people crying above in comments need to grow up.

a khan | 8 years ago | Reply "Further, the finance minister said, “Prices of commodities and oil were controlled.”" What? How did he do that? Did he engineer the global drop in oil prices by 60% last year himself? What a disgusting lying weasel. Energy prices falling is the only thing that has bailed out this pathetic, dysfunctional government, and that will reverse in the next year or three - all he has done has INCREASE taxes on the poor by increasing tax on energy for the consumer. Until and unless he taxes his pals in government and all his pals benefitting from the kickbacks on the government budgets, and the industrialists and elite who keep their wealth outside of the country - there is no fix. He will predictably miss next year's projections yet again, and like before, make no apology for it. The numbers just don't add up.

Pakistan | 8 years ago | Reply The Shadow Budget presented by Pakistan Tehrik e Insaf is balanced and far superior in content prepared for our current financial state of affairs.Ishaq Dar himself admitted on TV that if only he could have been advised a few days earlier......This was on the night if 4 June 2015.

Abdullah | 8 years ago | Reply Totally failed and full of corruption budget. Health and education are again at low priority of the government. Shame on Ishaq Dar for such proposals. He really is munshi rather than an educated Economist.

Shafqat Hussain | 8 years ago | Reply Once again they ignored Azad Kashmir, No sign of Muzaffarabad Mirpur Expressway, Not a single main highway in Azad Kashmir.

Mushtaq Ahmad | 8 years ago | Reply Mr. Ishaq Dar, in his budget speech, has stated that at the time their government took over the foreign exchange reserves stood at 7 billion dollars and that now they are 17 billion dollars. Mr. Dar is utterly wrong regarding foreign exchange reserves. According to SBP regular report the reserves stood at 11.446 billion on 7 June 2013 (see the SBP report http://www.sbp.org.pk/ecodata/FER/2013/Forex-14-June-13.pdf.)

shabeeb | 8 years ago | Reply for two consecutive years you have failed to achive your KPI's Mr. Dar you should find new job

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