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Pakistan: Federal Budget in Brief 2018 - 2019

IM Insights
By IM Insights
6 years ago
Pakistan: Federal Budget in Brief 2018 - 2019

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  1. PREFACE Budget in Brief presents an abridgement of the Federal Budget 2018-19 . It provides aggregated information on revenues and expenditures, budgeted for fiscal year 2018-19 alongwith budget estimates and revised estimates for the outgoing fiscal year 2017-18. Detailed information is available in the relevant budget documents. Budgeting and accounting classification system used in the budget remains the same, which was adopted under the New Accounting Model introduced in fiscal year 2004-05. The Medium Term Budgetary Framework (MTBF) process, initiated in the fiscal year 2009-10, has been strengthened. Indicative Budget Ceilings for the current and development budgets are issued to all Principal Accounting Officers of the Federal Government on a three-year rolling basis. The annual budget estimates for any fiscal year (e.g. 2018-19) are then finalised in consultation with various Federal Ministries. Linkage between allocations and public service delivery have been established through Output Based Budgeting. Performance of Federal Ministries/Divisions have been monitored against precisely defined key performance indicators. This document also includes medium term macroeconomic indicators to provide strategic economic perspective, and contextualize the Budget 2018-19. For the convenience of readers, some additional information regarding subsidies, loans and advances and public sector development programme has been shown separately. After approval by the parliament, all budget books, including the Budget in Brief, will be uploaded on the website of the Ministry of Finance: www.finance.gov.pk. ‘Budget at a Glance’ given at the end of this document offers a quick overview of the federal budget. I hope that this document will be beneficial to all those, who seek a simple and clear understanding of Budget 2018-19. Arif Ahmed Khan Secretary to the Government of Pakistan Finance Division Islamabad, the 27th April, 2018
  2. CONTENTS Page Chapter 1 : Review of the Budget 2017-18 Salient Features Summary - Budget and Revised Estimates Resources - Internal Resources • Net Revenue Receipts • Net Capital Receipts • Estimated Provincial Surplus - External Resources Expenditure - Current - Development 1 1 2 3 3 3 4 4 5 6 6 6 Chapter 2: The Budget 2018-19 Salient Features Comparative Budgetary Position 7 7 8 Chapter 3: Resource Position 2018-19 - Internal Resources • Net Revenue Receipts • Net Capital Receipts • Estimated Provincial Surplus 9 10 10 13 13 Chapter 4: External Resources Provincial Share in Federal Taxes NFC Award President's Order No. 5 of 2010 President's Order No. 6 of 2015 Details of Provincial Share in Federal Taxes Net Federal Transfers to Provinces 14 15 15 16 20 21 22 Chapter 5: Current Expenditure 2018-19 23 Current Expenditure (Summary) 23 Comparative Position (Comparison) 24 General Public Service 25 Defence Affairs and Services 26 _______________________________________________________________ Contd.........
  3. CONTENTS Public Order and Safety Affairs Economic Affairs Environment Protection Housing and Community Amenities Health Affairs and Services Recreational , Culture and Religion Education Affairs and Services Social Protection 27 28 29 29 30 31 32 33 Chapter 6: Subsidies & Grants/Transfers Details of Subsidies Details of Grants and Transfers 34 34 36 Chapter 7: Loans and Investments Current Loans and Advances Development Loans and Advances Current Investments 38 38 39 40 Chapter 8: Public Sector Development Programme Salient Features of PSDP Size of PSDP 41 41 42 Development Expenditure Outside PSDP 45 Medium Term Budgetary Framework (MTBF) Budget Strategy Paper Performance Budgeting Performance Monitoring Budget Preparation Process Macroeconomic Indicators 46 46 46 47 47 48 Chapter 9: Chapter 10: Climate Change Budgeting 49 Working of Fiscal Deficit and Financing for Budget 2018-19 51 Budget at a Glance for the Fiscal Year 2018-19 53 Glossary of Terms 55 ________________________________________________________________
  4. 1 CHAPTER - 1 REVIEW OF THE BUDGET 2017-18 SALIENT FEATURES 1 .1 The budget 2017-18 had the following salient features: a) The total outlay of budget 2017-18 was Rs 5,103.8 billion. This size was higher by 4.3% than the size of budget 2016-17. The size of outlay increased to Rs 5,361 billion in revised estimates 2017-18. b) The resource availability during 2017-18 had been estimated at Rs 4,713.7 billion, which increased to Rs 4,774.6 billion or by 1.3% in revised estimates 2017-18. c) The net revenue receipts for 2017-18 had been estimated at Rs 2,926.1 billion, which decreased to Rs 2,676.4 billion or by 8.5% in revised estimates 2017-18. d) The provincial share in federal revenue receipts was estimated at Rs 2,384.2 billion during 2017-18, which decreased to Rs 2,316.1 billion in revised estimates. e) The net capital receipts for 2017-18 had been estimated at Rs 552.5 billion, which increased to Rs 594.6 billion in revised estimates 2017-18 or by 7.6%. f) The external receipts in 2017-18 were estimated at Rs 837.8 billion, which increased to Rs 1,229.8 billion in revised estimates or by 46.8%. g) The overall expenditure during 2017-18 had been estimated at Rs 5,103.8 billion, out of which the share of current expenditure was Rs 3,763.7 billion and that of development expenditure was Rs 1,340.1 billion. Current expenditure in revised estimates 2017-18 showed an increase of Rs 534.6 billion from budget estimates, while development expenditure showed a decline of Rs 277.3 billion. h) The share of current expenditure in total budgetary outlay for 2017-18 was 73.7% as compared to 80.2% in revised estimates 2017-18. i) The expenditure on general public service for budget 2017-18 was estimated at Rs 2,553.6 billion, which was 67.9% of the total current expenditure. j) In budget 2017-18, the development expenditure outside Public Sector Development Programme (PSDP) was estimated at Rs 152.2 billion, which increased to Rs 153.2 billion in revised estimates 2017-18. Budget in Brief 2018-19
  5. 2 k ) The size of Public Sector Development Programme (PSDP) for 2017-18 was Rs 2,113 billion. Out of this, Rs 1,112 billion was allocated to provinces. Federal PSDP was estimated at Rs 1,001 billion, out of which Rs 377.9 billion for Federal Ministries/Divisions, Rs 380.6 billion for Corporations, Rs 30 billion for Prime Minister's Global SDGs Achievement Programme, Rs 40 billion for Special Federal Development Programme, Rs 12.5 billion for Energy for All, Rs 12.5 billion for Clean Drinking Water for all, Rs 7.5 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA), Rs 5 billion for Special Provision for Competition of CPEC Projects, Rs 45 billion for Relief and Rehabilitation of IDPs, Rs 45 billion for Security Enhancement, Rs 20 billion for Prime Minister's Youth Initiative and Rs 25 billion for Gas Infrastructure Development Cess. l) To meet expenditure in fiscal year 2017-18, bank borrowing was projected at Rs 390.1 billion, which has been revised upwards to Rs 586.5 billion. 1.2 Table-1 below presents a Summary of comparative position of the budget and revised estimates for fiscal year 2017-18: TABLE - 1 SUMMARY OF ESTIMATES FOR 2017-18 (Rs in Million) Classification RESOURCES (A + B + C) A Internal Resources - Net Revenue Receipts - Net Capital Receipts - Estimated Provincial Surplus B External Resources C Privatization Proceeds EXPENDITURE (I + II) I Current Expenditure on Revenue Account - Current Exp. on Revenue Receipts II Development Expenditure - Federal PSDP - Development Expenditure outside PSDP - Development Loans & Grants to Provinces BANK BORROWING Budget 2017-18 Revised 2017-18 4,713,686 3,825,863 2,926,074 552,520 347,269 837,824 4,774,567 3,544,812 2,676,407 594,554 273,852 1,229,754 50,000 0 5,103,780 3,763,709 3,763,709 1,340,072 1,001,000 152,200 186,871 5,361,038 4,298,279 4,298,279 1,062,759 750,000 153,174 159,585 390,094 586,472 Budget in Brief 2018-19
  6. 3 RESOURCES INTERNAL RESOURCES 1 .3 The internal resources come through net revenue receipts, capital receipts and estimated provincial surplus. Table-2 provides the details of budget and revised estimates for 2017-18 in respect of net revenue receipts, while Table-3 provides the details of net capital receipts. NET REVENUE RECEIPTS 1.4 After the share of Provinces in gross revenue is transferred, the net revenue receipts of Federal Government were estimated at Rs 2,926,074 million in the budget 2017-18, which have now been revised downwards to Rs 2,676,407 million in the revised estimates 2017-18 showing a decrease of 8.5%. Table-2 provides the details: TABLE - 2 NET REVENUE RECEIPTS 2017-18 (Rs in Million) Budget 2017-18 Revised 2017-18 4,330,463 4,013,000 1,594,910 2,418,090 317,463 4,147,305 3,935,000 1,563,000 2,372,000 212,305 979,854 214,689 845,182 236,429 Receipts from Civil Administration and Other Functions 413,172 284,459 Miscellaneous Receipts 351,992 324,294 Gross Revenue Receipts 5,310,317 4,992,486 Provincial Share in Gross Revenue 2,384,243 2,316,080 NET REVENUE RECEIPTS 2,926,074 2,676,407 Classification TAX REVENUE ( A + B) A. FBR TAXES - Direct Taxes - Indirect Taxes B. OTHER TAXES NON-TAX REVENUE - Income from Property and Enterprise - Budget in Brief 2018-19
  7. 4 1 .5 The tax revenue was estimated for budget 2017-18 at Rs 4,330,463 million, which decreased to Rs 4,147,305 million or by 4.2% in revised estimates 2017-18. The non-tax revenue for 2017-18 was estimated at Rs 979,854 million, which decreased to Rs 845,182 million or by 13.7% in revised estimates 2017-18. NET CAPITAL RECEIPTS 1.6 These receipts comprise proceeds of borrowing, money received in repayment of loans, recoveries of advances/investments, proceeds of saving schemes, net receipts from transactions under deposits and remittances heads. The net capital receipts for the fiscal year 2017-18 were budgeted at Rs 552,520 million. The revised estimates are Rs 594,554 million, which indicates an increase of 7.6%. Table-3 provides the details: TABLE - 3 NET CAPITAL RECEIPTS 2017-18 (Rs in Million) Classification I. CAPITAL RECEIPTS ( A + B + C ) Revised 2017-18 640,567 746,439 A. Recovery of Loans 112,537 134,415 B. Public Debt (Net) 314,937 543,408 184,937 130,000 59,130 484,278 213,093 68,616 88,047 151,886 552,520 594,554 - Permanent Debt - Floating Debt C. II. Budget 2017-18 Public Account DISBURSEMENTS NET CAPITAL RECEIPTS (I-II): ESTIMATED PROVINCIAL SURPLUS 1.7 The estimated provincial surplus was budgeted at Rs 347,269 million for 2017-18, which decreased to Rs 273,852 million in revised estimates 2017-18 or by 21.1%. Budget in Brief 2018-19
  8. 5 EXTERNAL RESOURCES 1 .8 The Government obtains foreign loans and grants to use for capital and development expenditure. The external loans for 2017-18 were budgeted at Rs 799,920 million, which are now projected at Rs 1,181,725 million in revised estimates showing an increase of 47.7%. 1.9 External grants decreased from Rs 26,810 million in the budget estimates 2017-18 to Rs 21,098 million in the revised estimates 2017-18 or by 21.3%. 1.10 Overall external resources were estimated at Rs 837,824 million, which increased to Rs 1,229,754 million or by 46.8% in the revised estimates 2017-18. Table-4 below presents the details: TABLE - 4 EXTERNAL RESOURCES 2017-18 (Rs in Million) Classification I. II. EXTERNAL LOANS ( a to d ) a. Project Loans b. Programme Loans d. Other Aid EXTERNAL GRANTS A. EXTERNAL RESOURCES (I + II): B. PROJECT LOANS & GRANTS OUTSIDE PSDP Loans Grants TOTAL EXTERNAL RESOURCES (A + B): Budget 2017-18 Revised 2017-18 799,920 1,181,725 329,824 312,880 95,571 48,107 374,525 820,738 26,810 21,098 826,730 1,202,823 11,093 26,932 10,822 22,030 271 837,824 4,902 1,229,754 Budget in Brief 2018-19
  9. 6 EXPENDITURE 1 .11 The budget estimates 2017-18 of the overall expenditure were Rs 5,103,780 million, which increased to Rs 5,361,038 million in revised estimates 2017-18 or by 5%. 1.12 The components of expenditure are current and development. Table-5 below shows the comparative position of the budget and revised estimates of current and development expenditure for the fiscal year 2017-18: TABLE - 5 CURRENT AND DEVELOPMENT EXPENDITURE 2017-18 (Rs in Million) Classification A. CURRENT - B. General Public Service Defence Affairs & Services Public Order and Safety Affairs Economic Affairs Environment Protection Housing and Community Amenities Health Affairs & Services Recreation, Culture and Religion Education Affairs and Services Social Protection DEVELOPMENT - Federal PSDP Development Expenditure outside PSDP Development Loans & Grants to Provinces TOTAL EXPENDITURE (A + B): Budget 2017-18 Revised 2017-18 3,763,709 4,298,279 2,553,633 920,166 109,604 62,940 1,141 2,329 12,847 8,434 90,516 2,100 2,977,275 999,237 119,417 80,742 1,228 2,449 12,944 11,866 90,818 2,302 1,340,072 1,062,759 1,001,000 152,200 186,871 750,000 153,174 159,585 5,103,780 5,361,038 Budget in Brief 2018-19
  10. 7 CHAPTER - 2 THE BUDGET 2018-19 SALIENT FEATURES 2 .1 The budget 2018-19 has the following salient features: a) The total outlay of budget 2018-19 is Rs 5,932.5 billion. This size is 16.2% higher than the size of budget estimates 2017-18. b) The resource availability during 2018-19 has been estimated at Rs 4,917.2 billion against Rs 4,713.7 billion in the budget estimates of 2017-18. c) The net revenue receipts for 2018-19 have been estimated at Rs 3,070.4 billion indicating an increase of 4.9% over the budget estimates of 2017-18. d) The provincial share in federal taxes is estimated at Rs 2,590.1 billion during 2018-19, which is 8.6% higher than the budget estimates for 2017-18. e) The net capital receipts for 2018-19 have been estimated at Rs 443.1 billion against the budget estimates of Rs 552.5 billion in 2017-18 i.e. a decrease of 19.8%. f) The external receipts in 2018-19 are estimated at Rs 1,118 billion. This shows an increase of 33.4% over the budget estimates for 2017-18. g) The overall expenditure during 2018-19 has been estimated at Rs 5,932.5 billion, out of which the current expenditure is Rs 4,780.4 billion and development expenditure is Rs 1,152.1 billion. h) The share of current and development expenditure respectively in total budgetary outlay for 2018-19 is 80.6% and 19.4%. i) The expenditure on General Public Services is estimated at Rs 3,340.4 billion, which is 69.9% of the current expenditure. j) The development expenditure outside PSDP has been estimated at Rs 180.2 billion in the budget 2018-19, which is higher by 18.4% than budget estimates 2017-18. Budget in Brief 2018-19
  11. 8 k ) The size of Public Sector Development Programme (PSDP) for 2018-19 is Rs 1,650 billion. Out of this, Rs 850 billion has been allocated to provinces. Federal PSDP has been estimated at Rs 800 billion, out of which Rs 420.4 billion for Federal Ministries/Divisions, Rs 246.1 billion for Corporations, Rs 5 billion for Pakistan Sustainable Development Goals (SDGs) and Community Development Programme, Rs 8.5 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA), Rs 5 billion for Special Provision for Competition of CEPEC Projects, Rs 10 billion for FATA 10 year Plan, Rs 45 billion for Relief and Rehabilitation of IDPs, Rs 45 billion for Security Enhancement, Rs 10 billion for Prime Minister's Youth Programme and Rs 5 billion for Gas Infrastructure Development Cess. l) To meet expenditure, bank borrowing has been estimated for 2018-19 at 1,015.3 billion, which is significantly higher than revised estimates 2017-18. Rs 2.2 Table-6 below presents the comparative position of budget and revised estimates for fiscal year 2017-18 and budget estimates for fiscal year 2018-19. TABLE - 6 COMPARATIVE BUDGETARY POSITION 2017-18 AND 2018-19 Classification RESOURCES ( A + B + C ) A Internal Resources Net Revenue Receipts Net Capital Receipts Estimated Provincial Surplus B External Resources C Privatization Proceeds EXPENDITURE (I + II) I Current Expenditure on Revenue Account - Current Exp. on Revenue Account II Development Expenditure - Federal PSDP - Dev. Expenditure outside PDSP - Dev. Loans & Grants to Provinces BANK BORROWING Budget 2017-18 (Rs in Million) Revised Budget 2017-18 2018-19 4,713,686 3,825,863 2,926,074 552,520 347,269 837,824 50,000 5,103,780 4,774,567 3,544,812 2,676,407 594,554 273,852 1,229,754 5,361,038 4,917,162 3,799,139 3,070,439 443,096 285,604 1,118,024 5,932,464 3,763,709 3,763,709 4,298,279 4,298,279 4,780,359 4,780,359 1,340,072 1,062,759 1,152,105 1,001,000 152,200 186,871 390,094 750,000 153,174 159,585 586,472 800,000 180,238 171,867 1,015,302 Total Federal PSDP 2018-19 would be Rs 1,030 billion out of which Rs 230 billion would be self financing by the corporation/authorities and Rs 800 billion would be provided through budget 2018-19. Budget in Brief 2018-19
  12. 9 CHAPTER - 3 RESOURCE POSITION 2018-19 3 .1 There are two type of resources i.e. internal and external. The internal resources comprise of revenue receipts, capital receipts and estimated provincial surplus. The external resources come from foreign loans and grants. Table-7 below presents the overall comparative resource position for the year 2017-18 (budget and revised) and 2018-19 (budget). TABLE - 7 RESOURCE POSITION (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 3,913,910 3,696,698 4,041,814 2,926,074 2,676,407 3,070,439 (i) Gross Revenue Receipts 5,310,317 4,992,486 5,660,505 (ii) Less Provincial Share in Taxes 2,384,243 2,316,080 2,590,066 640,567 746,439 685,770 III. Estimated Provincial Surplus 347,269 273,852 285,604 External Resources 837,824 1,229,754 1,118,024 4,751,733 4,926,452 5,159,837 Classification A Internal Resources I. II. B Net Revenue Receipts [(i) - (ii)] Total Capital Receipts TOTAL RESOURCES ( A + B ) Budget in Brief 2018-19
  13. 10 INTERNAL RESOURCES I . NET REVENUE RECEIPTS 3.2 The gross revenue receipts in budget 2018-19 are estimated at Rs 5,660,505 million showing an increase of 6.6% over the budget estimates 2017-18 and 13.4% over revised estimates of outgoing fiscal year 2017-18. 3.3 The provincial share in taxes for 2018-19 is estimated at Rs 2,590,066 million, which is 11.8% higher than the revised estimates of 2017-18. After the share of Provinces in gross revenues is transferred, the net revenue of Federal Government has been estimated to be Rs 3,070,439 million for fiscal year 2018-19. 3.4 The tax revenue for 2018-19 is estimated at Rs 4,888,645 million, which reflects an increase of 17.9% over revised estimates 2017-18. Out of which FBR collection is Rs 4,435,000 million. Non-tax revenue is projected at Rs 771,860 million in 2018-19 as compared with Rs 845,182 million in revised estimates 2017-18. 3.5 Tables 8 to 10 present information on various components of tax revenue and non-tax revenue. TABLE - 8 NET REVENUE RECEIPTS (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 TAX REVENUE (A + B) 4,330,463 4,147,305 4,888,645 A. FBR TAXES - Direct Taxes - Indirect Taxes 4,013,000 1,594,910 2,418,090 317,463 3,935,000 1,563,000 2,372,000 4,435,000 1,735,000 2,700,000 212,305 453,645 979,854 214,689 413,172 351,992 845,182 236,429 284,459 324,294 771,860 236,869 305,837 229,155 Gross Revenue Receipts 5,310,317 4,992,486 5,660,505 Provincial Share in Gross Revenue 2,384,243 2,316,080 2,590,066 NET REVENUE RECEIPTS 2,926,074 2,676,407 3,070,439 Classification B. OTHER TAXES NON-TAX REVENUE - Property and Enterprise - Civil Administration and Other Functions - Miscellaneous Receipts Budget in Brief 2018-19
  14. 11 TABLE - 9 TAX REVENUE (Rs in Million) Classification A. FBR TAXES (I + II) I. Direct Taxes - Income Tax - Workers Welfare Fund - Capital Value Tax II. Indirect Taxes B. - Customs Duties - Sales Tax - Federal Excise OTHER TAXES Budget 2017-18 Revised 2017-18 Budget 2018-19 4,013,000 3,935,000 4,435,000 1,594,910 1,563,000 1,735,000 1,577,557 1,540,423 1,709,939 14,622 16,789 18,636 2,731 5,788 6,425 2,418,090 2,372,000 2,700,000 581,371 600,000 735,000 1,605,200 1,547,000 1,700,000 231,519 225,000 265,000 317,463 212,305 453,645 4,373 4,235 37,555 90 70 90 110,000 15,000 100,000 43,000 23,000 16,000 - Other Taxes (ICT) - Airport Tax - Gas Infrastructure Cess (GIDC) Development - Natural Surcharge Development - Petroleum Levy 160,000 170,000 300,000 TOTAL TAX REVENUE: 4,330,463 4,147,305 4,888,645 Gas Budget in Brief 2018-19
  15. 12 TABLE - 10 NON-TAX REVENUE (Rs in Million) Classification NON-TAX REVENUE (A+B+C) A. Income from Property and Enterprise - Pakistan Telecom Authority (Surplus) - PTA (3 G Licences) Authorities (Surplus/ - Regulatory penalities) - Mark up (Provinces) - Mark up (PSEs & Others) - Dividends B. Receipts from Civil Administration and Other Functions - General Administration - SBP Profit - Defence - Law and Order - Community Services - Social Services C. Miscellaneous Receipts - Economic Services - Foreign Grants - Citizenship, Naturalization & Passport Fee - Discount Retained on Local Crude Price - Royalty on Crude Oil - Royalty on Natural Gas - Windfall Levy against Crude Oil - Petroleum Levy on LPG - Extraordinary Receipts (UNO) - Extraordinary Receipts (Others) - Others Budget 2017-18 Revised 2017-18 Budget 2018-19 979,854 845,182 771,860 214,689 1,000 10,000 236,429 3,029 6,854 236,869 12,787 6,854 312 14,111 95,984 93,283 334 16,222 130,018 79,973 325 16,782 123,649 76,471 413,172 5,196 260,000 141,797 1,501 2,070 2,608 284,459 5,339 260,000 15,204 1,363 1,143 1,410 305,837 5,754 280,000 15,960 1,412 1,214 1,497 351,992 21,381 43,546 324,294 11,144 34,000 229,155 8,596 15,902 28,000 10,000 19,127 39,404 8,000 2,000 36,923 135,056 8,554 24,000 10,000 16,811 36,433 5,000 2,000 32,384 135,046 17,475 31,000 10,000 16,826 36,516 5,000 2,000 34,001 50,062 19,252 Budget in Brief 2018-19
  16. 13 II . NET CAPITAL RECEIPTS 3.6 Capital receipts on net basis in the budget 2018-19 have been estimated at Rs 443,096 million against Rs 552,520 million in the budget estimates 2017-18 and Rs 594,554 million in the revised estimates 2017-18. Table-11 below presents the details of capital receipts, disbursements and net capital receipts. TABLE - 11 NET CAPITAL RECEIPTS (Rs in Million) Classification Budget 2017-18 Revised 2017-18 Budget 2018-19 TOTAL CAPITAL RECEIPTS (I + II) 640,567 746,439 685,770 I. Recoveries of Loans & Advances - Provinces - Others II. CAPITAL RECEIPTS (A + B) A. Public Debt Net (1 + 2) 1. Permanent Debt - Pakistan Investment Bonds - Ijara Sukuk Bonds - FEBCs - FCBCs - U.S. Dollar Bearer Certificates - Special US Dollar Bonds - Premium Prize Bonds (Regd.) 2. Floating Debt - Prize Bonds - Treasury Bills Auction B. Public Account - National Savings Schemes - G.P. Fund - Net Deposits III. DISBURSEMENTS - Government Investments, Loans, Advances and Others - Repayment of Short Term Credits 112,537 51,947 60,590 528,030 314,937 184,937 115,000 60,000 (5) (5) (3) (50) 10,000 130,000 85,000 45,000 213,093 159,503 6,500 47,090 88,047 134,415 55,076 79,339 612,024 543,408 59,130 (3,577) 60,000 (1) (1) (40) 2,749 484,278 80,981 403,297 68,616 71,105 1,816 (4,305) 151,886 152,989 61,596 91,393 532,781 406,095 113,557 100,000 10,620 (5) (5) (3) (50) 3,000 292,538 92,538 200,000 126,686 128,698 2,000 (4,012) 242,675 48,273 39,774 58,314 93,572 68,512 174,163 NET CAPITAL RECEIPTS (I + II - III): 552,520 594,554 443,096 (12,317) (21,025) (22,882) Net Lending to Others: III. ESTIMATED PROVINCIAL SURPLUS 3.7 The estimated provincial surplus has been projected at Rs 285,604 million for 2018-19 as against Rs 347,269 million in revised estimates 2017-18. Budget in Brief 2018-19
  17. 14 EXTERNAL RESOURCES 3 .8 The government obtains loans and grants to bridge the gap between the receipts and expenditure. The external resources for 2018-19 have been projected at Rs 1,118,024 million, which are higher by 33.4% and lower by 9.1% respectively when compared with budget and revised estimates 2017-18. Table-12 below presents the details of receipts from external resources. TABLE - 12 EXTERNAL RESOURCES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 799,920 1,181,725 1,079,968 329,824 312,880 290,071 151,984 13,554 138,430 177,840 179,766 16,640 163,126 133,114 152,635 22,576 130,060 137,435 95,571 48,107 87,897 374,525 163,525 105,500 105,500 820,738 140,068 274,375 406,295 702,000 117,000 234,000 351,000 26,810 26,810 6,184 3,467 17,160 21,098 21,098 3,685 4,003 13,410 29,452 29,452 6,439 1,228 21,784 826,730 1,202,823 1,109,419 11,093 26,932 8,605 Loans 10,822 22,030 8,024 Grants 271 4,902 581 837,824 1,229,754 1,118,024 Classification I. EXTERNAL LOANS (A to C) A. Project Loans (i+ii) Federal Government - Ministries/Divisions - Corporations/Autonomous Bodies ii Provinces i B. Programme Loans C. Other Aid - Islamic Development Bank - Sukuk Bond - Commercial Banks II. EXTERNAL GRANTS - Project Aid Grants • Federal Departments • Autonomous Bodies • Provinces D. External Resources (I + II): E. Project PSDP Loans & Grants Outside TOTAL EXTERNAL RESOURCES (D+E): Budget in Brief 2018-19
  18. 15 CHAPTER - 4 PROVINCIAL SHARE IN FEDERAL TAXES NFC AWARD 4 .1 Pakistan is a Federal democracy. In order to maintain inter-governmental fiscal relationship, Article 160 of the Constitution provides for setting up of a National Finance Commission (NFC) with intervals not exceeding five years. The mandate of NFC is to make recommendations to the President for the distribution of resources between the Federal and Provincial Governments. The recommendations of the NFC are given legal cover through a Presidential Order. 4.2 Presently, 7th National Finance Commission (NFC) Award is in practice. Through this Award, the financial autonomy of the provinces has been ensured by increasing their share in the Divisible Pool (taxes) from 46.5% to 57.5% from 2011-12 onwards. For the first time in history, multiple indicators were adopted for distribution of provincial shares (horizontal distribution) in the divisible pool, whereas in all the previous Awards, population remained as sole criterion for distribution of provincial share with special grants (subventions) to smaller provinces. 4.3 A special feature of the 7th NFC Award is recognition for requirements of Balochistan. Its share from the divisible pool was guaranteed at Rs 83 billion in financial year 2010-11, which was more than double from the actual divisible pool share of financial year 2009-10. It has also been ensured that Balochistan province would receive its share in the divisible pool, based on the budgetary projections instead of actual FBR collection. Shortfall, if any, based on the actual collection, reported by FBR, is being made up by the Federal Government out of its own share. This arrangement is in practice since financial year 2011-12 and shall continue till 7th NFC Award remains in field. In this regard, an amount of Rs 90.150 billion have been provided to Government of Balochistan, as additionality, from 2010-11 to 2017-18 (upto 30.3.2018). 4.4 The 8th NFC Award was constituted on 21st July, 2010, but it did not give any Award as the latest Award was just implemented. The 9th NFC was constituted on 24th April, 2015 and its 1st meeting was held on 28th April, 2015. the 9th NFC, in its 1st meeting, constituted four working groups to undertake thematic studies to assist the commission to make its deliberation meaningful. The reports of Working Groups were presented and discussed in the 3rd meeting of the NFC held on 19th December, 2016. The deliberations for new NFC Award are under active consideration. It is expected that new NFC Award would be announced as soon as the consensus among all stakeholders is arrived. The present Award will remain operative till a new Award is concluded and implemented. Budget in Brief 2018-19
  19. 16 4 .5 The 7th NFC Award has been given legal cover through President’s Order No.5 of 2010, which are reproduced as follows: "PRESIDENT'S ORDER No. 5 of 2010 AN ORDER to provide for distribution of revenues and certain grants WHEREAS in pursuance of clause (1) of Article 160 of the Constitution of the Islamic Republic of Pakistan hereinafter referred to as the Constitution, the President, by the Finance Division's Notification No. S.R.O. 739(I)/2005, dated 21st July 2005, as modified by the said Division's Notification No. S.R.O. 693(I)/2009, dated 24th July 2009, appointed a National Finance Commission to make recommendations, among other matters, as to the distribution between the Federation and the Provinces of the net proceeds of certain taxes; AND WHEREAS the said Commission has also submitted its recommendations with regard to the said distribution; NOW, THEREFORE, in pursuance of clauses (4) and (7) of Article 160 of the Constitution, the President is pleased to make the following Order:— 1. Short title and commencement.— (1) This Order may be called the Distribution of Revenues and Grants-in-Aid Order, 2010. (2) It shall come into force on the first day of July, 2010. 2. Definitions.— In this Order, unless there is anything repugnant in the subject or context,─ (a) "net proceeds" means, in relation to any tax, duty or levy, the proceeds thereof reduced by the cost of collection as ascertained and certified by the Auditor General of Pakistan; and (b) "taxes on income" includes corporation tax but does not include taxes on income consisting of remuneration paid out of the Federal Consolidated Fund. Budget in Brief 2018-19
  20. 17 3 . Distribution of Revenues.—(1) The divisible pool taxes in each year shall consist of the following taxes levied and collected by the Federal Government in that year, namely:─ (a) taxes on income; (b) wealth tax; (c) capital value tax; (d) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed; (e) export duties on cotton; (f) customs duties; (g) federal excise duties excluding the excise duty on gas charged at well-head; and (h) any other tax which may be levied by the Federal Government. (2) One percent of the net proceeds of divisible pool taxes shall be assigned to Government of Khyber Pakhtunkhwa to meet the expenses on war on terror. (3) After deducting the amounts as prescribed in clause (2), of the balance amount of the net proceeds of divisible pool taxes, fifty-six percent shall be assigned to provinces during the financial year 2010-11 and fifty-seven and half percent from the financial year 2011-12 onwards. The share of the Federal Government in the net proceeds of divisible pool shall be forty-four percent during the financial year 2010-11 and forty-two and half percent from the financial year 2011-12 onwards. 4. Allocation of shares to the Provincial Governments.—(1) The Province wise ratios given in clause (2) are based on multiple indicators. The indicators and their respective weights as agreed upon are:— (a) (b) (c) (d) Population Poverty or backwardness Revenue collection or generation Inverse population density 82.0% 10.3% 5.0% 2.7% Budget in Brief 2018-19
  21. 18 (2) The sum assigned to the Provincial Governments under Article 3 shall be distributed amongst the Provinces on the basis of the percentage specified against each:─ (a) Balochistan (b) Khyber Pakhtunkhwa 14.62% (c) Punjab 51.74% (d) Sindh 24.55% 9.09% Total: 100.00% (3) The Federal Government shall guarantee that Balochistan province shall receive the projected sum of eighty-three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first year of the Award. Any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement for Balochistan shall remain protected throughout the remaining four years of the Award based on annual budgetary projections. 5. Payment of net proceeds of royalty on crude oil.─Each of the provinces shall be paid in each financial year as a share in the net proceeds of the total royalties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Province in that year bears to the total production of crude oil. 6. Payment of net proceeds of development surcharge on natural gas to the Provinces.─(1) Each of the Provinces shall be paid in each financial year as a share in the net proceeds to be worked out based on average rate per MMBTU of the respective province. The average rate per MMBTU shall be derived by notionally clubbing both the royalty on natural gas and development surcharge on Gas. Royalty on natural gas shall be distributed in accordance with clause (1) of Article 161 of the Constitution whereas the development surcharge on natural gas would be distributed by making adjustments based on this average rate. (2) The development surcharge on natural gas for Balochistan with effect from 1st July 2002, shall be re-worked out hypothetically on the basis of the formula given in clause (1) and the amount, subject to maximum of ten billion rupees, shall be paid in five years in five equal installments by the Federal Government as grants to be charged on the Federal Consolidated Fund. Budget in Brief 2018-19
  22. 19 7 . Grants-in-Aid to the Provinces.―There shall be charged upon the Federal Consolidated Fund each year, as grants-in-aid of the revenues of the province of Sindh an amount equivalent to 0.66% of the provincial share in the net proceeds of divisible pool as a compensation for the losses on account of abolition of octroi and zilla tax. 8. Sales tax on services.—NFC recognizes that sales tax on services is a Provincial subject under the Constitution of the Islamic Republic of Pakistan, and may be collected by respective Provinces, if they so desired. 9. Miscellaneous.—(1) NFC also recommended increase in the rate of excise duty on natural gas to Rs 10.0 per MMBTU. Federal Government may initiate necessary legislation accordingly. (2) The NFC recommended that the Federal Government and Provincial Governments should streamline their tax collection systems to reduce leakages and increase their revenues through efforts to improve taxation in order to achieve a 15% tax to GDP ratio by the terminal year i.e. 2014-15. Provinces would initiate steps to effectively tax the agriculture and real estate sectors. Federal Government and Provincial Governments may take necessary administrative and legislative steps accordingly. (3) Federal Government and Provincial Governments would develop and enforce mechanism for maintaining fiscal discipline at the Federal and Provincial levels through legislative and administrative measures. (4) The Federal Government may assist the Provinces through specific grants in times of unforeseen calamities. (5) The meetings of the NFC may be convened regularly on a quarterly basis to monitor implementation of the award in letter and spirit. 10. Repeal.— The Distribution of Revenues and Grants-in-Aid Order, 1997 (P.O. No. 1 of 1997), and the Distribution of Revenues and Grants-in-Aid, Order, 2010 (P.O. 4 of 2010) are hereby repealed. ASIF ALI ZARDARI, President." _________ Budget in Brief 2018-19
  23. 20 “PRESIDENT’S ORDER NO.6 OF 2015 AN ORDER To amend Distribution of Revenues and Grants-in-Aid Order, 2010 (President’s Order No. 5 of 2010) WHEREAS, it is expedient to amend the Distribution of Revenues and Grants-in-Aid Order, 2010 (P.O.No.5 of 2010), for the purpose hereinafter appearing. NOW, THEREFORE, in pursuance of Clause (6) read with Clause (7) of Article 160 of the Constitution of the Islamic Republic of Pakistan, the President is pleased to make the following Order:1. Short title and commencement.—(1) This Order may be called the Distribution of Revenues and Grants-in-Aid (Amendment) Order, 2015. (2) It shall come into force on the first day of July, 2015. (3) It will remain in force till further orders. 2. Substitution of Article-4(3) P.O. No.5 of 2010.—In the Distribution of Revenues and Grants-in-Aid Order, 2010 (P.O.No.5 of 2010), for Article 4(3) the following shall be substituted, namely:— (3) The Federal Government shall guarantee that Balochistan province shall receive the projected sum of eighty-three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first year of the Award and any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement for Balochistan shall remain protected throughout the Award period based on annual budgetary projections. MAMNOON HUSSAIN, President." ________ Budget in Brief 2018-19
  24. 21 4 .6 In accordance with the framework for distribution of resources structured by the 7th NFC Award, provincial share in federal taxes and straight transfers to Provinces are estimated at Rs 2,590,066 million for fiscal year 2018-19, reflecting an increase of 11.8% over revised estimates 2017-18. The details are as in Table-13 below: TABLE - 13 DETAILS OF PROVINCIAL SHARE IN FEDERAL TAXES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 2,268,999 895,524 2,230,087 876,327 2,508,834 970,673 1,566 3,163 3,684 918,829 888,483 973,084 123,554 122,532 144,197 329,526 339,582 417,196 115,244 18,745 85,993 16,475 81,232 16,490 - Royalty on Natural Gas 38,616 35,705 35,785 - Gas Development Surcharge 42,140 22,540 15,680 - Excise Duty on Natural Gas 15,743 11,273 13,277 TOTAL (A to B): 2,384,243 2,316,080 2,590,066 PROVINCE- WISE SHARE Punjab 1,161,824 1,138,410 1,281,980 612,590 584,322 648,813 389,854 381,032 426,095 219,974 212,316 233,177 2,384,243 2,316,080 2,590,066 Classification A. DIVISIBLE POOL TAXES - Income Tax - Capital Value Tax - Sales Tax (Excl. GST on Services) - Federal Excise (excl. Excise Duty on Natural Gas) - Customs Duties (excl. Export Development Surcharge) B. STRAIGHT TRANSFERS - Royalty on Crude Oil Sindh Khyber Pakhtunkhwa (Inclusive 1% War on Terror) Balochistan TOTAL PROVINCIAL SHARE: Budget in Brief 2018-19
  25. 22 4 .7 Table-14 below presents total net federal transfers to provinces. TABLE - 14 NET FEDERAL TRANSFERS TO PROVINCES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 A. Total Transfers to Provinces 2,597,166 2,502,150 2,789,983 Divisible Pool Taxes Straight Transfers Special Grants / Subventions Project Loans and Grants Programme Loans Japanese Grant 2,268,999 115,244 26,000 177,840 9,031 51 2,230,087 85,993 26,485 133,114 26,471 1 2,508,834 81,232 28,000 137,435 34,431 50 66,057 71,298 78,378 14,111 51,947 16,222 55,076 16,782 61,596 2,531,108 2,430,852 2,711,605 Classification - B. Less Payments to Federal Govt. - Interest Payments - Loans Repayments NET TRANSFERS TO PROVINCES (A-B): 4.8 In accordance with the framework for distribution of resources structured by the 7th NFC Award, the net transfers to provinces are Rs 2,711,605 million in the budget estimates 2018-19. These transfers were estimated at Rs 2,531,108 million in the budget estimates 2017-18 and Rs 2,430,852 million in revised estimates 201718. Of this account, budget for 2018-19 reflecting an increase of 7.1% and 11.6% over budget and revised estimates 2017-18 respectively. Budget in Brief 2018-19
  26. 23 CHAPTER - 5 CURRENT EXPENDITURE 2018-19 5 .1 Table-15 below presents a summary of current expenditure: TABLE - 15 SUMMARY (Rs in Million) Classification Budget 2017-18 Revised 2017-18 Budget 2018-19 1,363,016 1,231,000 132,016 1,526,204 1,332,001 194,203 1,620,230 1,391,000 229,230 (i) Mark-up Payment Mark-up on Domestic Debt Mark-up on Foreign Debt - (ii) Pension Military Civil - 248,000 180,152 67,848 333,355 253,000 80,355 342,000 259,779 82,221 (iii) Defence Affairs and Services Defence Services Defence Administration - 920,166 917,949 2,217 999,237 995,949 3,288 1,100,334 1,097,949 2,385 (iv) Grants and Transfers Grants to Provinces Grants to Others - 430,230 26,000 404,230 461,638 26,485 435,153 477,924 28,000 449,924 (v) Subsidies 138,846 147,604 174,746 (vi) Running of Civil Government Salary a) Pay b) Allowance Non-Salary Others 376,840 210,735 104,348 106,387 163,605 2,500 402,076 217,284 108,475 108,809 184,792 - 463,371 242,742 128,011 114,731 218,129 2,500 CURRENT EXPENDITURE (i to vi) 3,477,097 3,870,114 4,178,605 286,612 428,165 601,754 3,763,709 4,298,279 4,780,359 (vii) Foreign Loans Repayment TOTAL CURRENT EXPENDITURE (includes foreign loans repayment) Budget in Brief 2018-19
  27. 24 5 .2 The main components of current expenditure are mark-up on government borrowing, defense, running of civil government, pension, grants and subsidies. Estimates for total current expenditure in the budget for fiscal year 2017-18 stood at Rs 3,763,709 million, which have now been revised upwards to Rs 4,298,279 million. For fiscal year 2018-19 an allocation of Rs 4,780,358 million has been made for current expenditure, showing an increase of 27% and 11.2% over the budget and revised estimates respectively of the outgoing fiscal year 2017-18. 5.3 Table-16 below presents the comparative position of the budget and revised estimates of current expenditure for the year 2017-18 along with the budget estimates 2018-19. It shows breakup of Current Expenditure according to functional classification. TABLE - 16 CURRENT EXPENDITURE (Rs in Million) Classification Budget 2017-18 Revised 2017-18 Budget 2018-19 1) General Public Service 2,553,633 2,977,275 3,340,431 2) Defence Affairs and Services 920,166 999,237 1,100,334 3) Public Order and Safety Affairs 109,604 119,417 132,289 4) Economic Affairs 62,940 80,742 80,750 5) Environment Protection 1,141 1,228 1,261 6) Housing and Community Amenities 7) Health Affairs & Services 8) Recreation, Culture and Religion 9) Education Affairs and Services 10) Social Protection TOTAL: 2,329 2,449 2,339 12,847 12,944 13,897 8,434 11,866 9,242 90,516 90,818 97,420 2,100 2,302 2,396 3,763,709 4,298,279 4,780,359 5.4 The bulk of expenditure falls under General Public Service. The expenditure against this head has been budgeted at Rs 3,340,431 million for 2018-19, which is 69.9% of current expenditure. Budget in Brief 2018-19
  28. 25 GENERAL PUBLIC SERVICE 5 .5 Under the head of General Public Service, the major portion goes to executive & legislative organs, financial, fiscal and external affairs. At Rs 2,781,312 million, this component forms 84.3% of the allocation for General Public Service. The main heads of expenses are Servicing of Domestic Debt, Foreign Loans Repayment and Others. Transfer payments constitute another important item. 5.6 The details of expenditures classified under General Public Service are given in Table-17 below: TABLE - 17 GENERAL PUBLIC SERVICE (Rs in Million) Classification GENERAL PUBLIC SERVICE Executive & Legislative Organs, Financial, Fiscal Affairs & External Affairs - Superannuation Allowances & Pensions - Servicing of Foreign Debt - Foreign Loans Repayment - Servicing of Domestic Debt - Others Foreign Economic Aid Transfers General Services Basic Research Research and Development General Public Services Administration of General Public Services General Public Services not elsewhere defined Budget 2017-18 Revised 2017-18 Budget 2018-19 2,553,633 2,977,275 3,340,431 2,083,532 248,000 132,016 286,612 1,231,000 185,905 4,632 430,230 6,599 3,974 2,470,428 333,355 194,203 428,165 1,332,001 182,703 4,551 461,638 6,945 4,019 2,781,312 342,000 229,230 601,754 1,391,000 217,329 4,762 477,924 7,027 5,438 11,712 2,348 12,120 8,999 13,072 2,531 10,605 8,576 48,365 Budget in Brief 2018-19
  29. 26 DEFENCE AFFAIRS AND SERVICES 5 .7 Details of estimates of expenditure on Defence Affairs and Services in 2017-18 (budget & revised) and 2018-19 (budget) are given in Table-18 below: TABLE - 18 DEFENCE AFFAIRS AND SERVICES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 920,166 999,237 1,100,334 2,217 3,288 2,385 - Defence Services 917,949 995,949 1,097,949 - Employees Related Expenses 322,142 363,476 422,911 - Operating Expenses 225,521 250,775 253,467 - Physical Assets 243,991 250,419 282,328 - Civil Works 128,346 133,330 141,293 (2,051) (2,051) (2,051) Classification DEFENCE AFFAIRS AND SERVICES - Defence Administration - Less Recoveries Budget in Brief 2018-19
  30. 27 PUBLIC ORDER AND SAFETY AFFAIRS 5 .8 Under the head of Public Order and Safety Affairs, an amount of Rs 132,289 million has been provided in the budget 2018-19 as compared with Rs 109,604 million in the budget estimates 2017-18 and Rs 119,417 million in revised estimates of the outgoing fiscal year 2017-18. The allocation for Police (Rs 122,974 million) forms the major component, with a share of 93%, in the total allocation under this head. Table-19 below provides the details: TABLE - 19 PUBLIC ORDER AND SAFETY AFFAIRS (Rs in Million) Classification PUBLIC ORDER AND SAFETY AFFAIRS Budget 2017-18 Revised 2017-18 Budget 2018-19 109,604 119,417 132,289 5,174 5,179 5,631 101,174 110,802 122,974 203 203 293 - Law Courts - Police - Fire Protection - Prison Administration and Operation 43 43 53 - R & D Public Order and Safety 32 32 36 - Administration of Public Order 2,977 3,157 3,302 Budget in Brief 2018-19
  31. 28 ECONOMIC AFFAIRS 5 .9 The allocation under the head of Economic Affairs in the budget 2018-19 has been projected at Rs 80,750 million, as compared with Rs 62,940 million in the budget estimates 2017-18 and Rs 80,742 million in revised estimates 2017-18. Major share of this head goes to Agriculture, Food, Irrigation, Forestry and Fishing, which is 38.6% of total allocation for Economic Affairs. Table-20 below provides the details under this head: TABLE - 20 ECONOMIC AFFAIRS (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 62,940 80,742 80,750 - General Economic, Commercial and Labour Affairs 17,474 22,896 26,306 - Agriculture, Food, Irrigation, Forestry and Fishing 26,020 37,935 31,188 803 764 709 1,565 1,693 1,773 12,354 12,354 15,564 - Communications 3,113 3,316 3,461 - Others Industries 1,611 1,785 1,749 Classification ECONOMIC AFFAIRS - Fuel and Energy - Mining and Manufacturing - Construction and Transport Budget in Brief 2018-19
  32. 29 ENVIRONMENT PROTECTION 5 .10 Under the head of Environment Protection, an amount of Rs 1,261 million has been estimated for budget 2018-19 for Waste Water Management, which is higher by 10.5% than budget estimates 2017-18 and 2.7% when compared with revised estimates 2017-18. TABLE - 21 ENVIRONMENT PROTECTION (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 ENVIRONMENT PROTECTION 1,141 1,228 1,261 - Waste Water Management 1,141 1,228 1,261 Classification HOUSING AND COMMUNITY AMENITIES 5.11 Under the head of Housing and Community Amenities, an amount of Rs 2,339 million has been provided in the budget 2018-19 for Community Development, as compared with Rs 2,329 million in the budget estimates 2017-18 and Rs 2,449 million in revised estimates 2017-18. TABLE - 22 HOUSING AND COMMUNITY AMENITIES (Rs in Million) Classification HOUSING AND COMMUNITY AMENITIES - Community Development Budget 2017-18 Revised 2017-18 Budget 2018-19 2,329 2,449 2,339 2,329 2,449 2,339 Budget in Brief 2018-19
  33. 30 HEALTH AFFAIRS AND SERVICES 5 .12 Under the head of Health Affairs and Services, a total allocation of Rs 13,897 million has been made in the budget estimates 2018-19, which is higher by 8.2% and 7.4% when compared with budget and revised estimates 2017-18. The allocation for Hospital Services forms the major component, which is 83.9% under this classification. Details are given in Table-23 below: TABLE - 23 HEALTH AFFAIRS AND SERVICES (Rs in Million) Classification HEALTH AFFAIRS AND SERVICES - Medical Products, Equipment - Hospital Services - Public Health Services - Health Administration Appliances Budget 2017-18 Revised 2017-18 Budget 2018-19 12,847 12,944 13,897 29 29 31 10,823 10,867 11,657 439 442 469 1,555 1,606 1,740 and Budget in Brief 2018-19
  34. 31 RECREATION , CULTURE AND RELIGION 5.13 In budget 2018-19 an amount of Rs 9,242 million has been budgeted for Recreation, Culture and Religion. Overall estimates under this classification for 2018-19 are higher by 9.6% when compared with budget estimates 2017-18, while lower by 22.1% when compared with revised estimates 2017-18. The bulk of expenditure under this head has been earmarked for Broadcasting and Publishing, which is 76.7% of the total allocation. Details are given in Table-24 below: TABLE - 24 RECREATION, CULTURE AND RELIGION (Rs in Million) Classification RECREATION, CULTURE AND RELIGION - Recreation and Sporting Services - Cultural Services - Broadcasting and Publishing - Religious Affairs - Administration of Recreation & Culture Budget 2017-18 Revised 2017-18 Budget 2018-19 8,434 11,866 9,242 1 1 1 618 644 681 6,483 8,124 7,091 959 2,724 1,032 373 373 437 Information, Budget in Brief 2018-19
  35. 32 EDUCATION AFFAIRS AND SERVICES 5 .14 Education Affairs and Services have been provided with Rs 97,420 million in the budget estimates 2018-19 as compared with Rs 90,516 million in budget estimates 2017-18 and Rs 90,818 million in revised estimates 2017-18. The bulk of expenditure at Rs 71,824 million has been allocated for Tertiary Education Affairs and Services in budget 2018-19, which is 73.7% of the total allocation under this head. The details are as under: TABLE - 25 EDUCATION AFFAIRS AND SERVICES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 90,516 90,818 97,420 8,748 8,768 10,120 - Secondary Education Affairs & Services 10,798 10,875 12,365 - Tertiary Education Affairs and Services 68,252 68,466 71,824 70 70 77 274 281 295 1,286 1,288 1,588 1,088 1,071 1,151 Classification EDUCATION AFFAIRS AND SERVICES - Pre-Primary & Primary Education Affairs Services - Education Services not Definable by Level - Subsidiary Services to Education - Administration Affairs, - Education elsewhere classified Services not Budget in Brief 2018-19
  36. 33 SOCIAL PROTECTION 5 .15 Under the head of Social Protection, an amount of Rs 2,396 million has been allocated in the budget 2018-19, which is higher by Rs 296 million as compared with budget estimates 2017-18 and Rs 94 million when compared with revised estimates 2017-18. The revised estimates include additional expenditures on account of emergency relief and repatriation. TABLE - 26 SOCIAL PROTECTION (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 SOCIAL PROTECTION 2,100 2,302 2,396 - Administration 1,503 1,705 1,616 - Others 598 598 780 Classification Budget in Brief 2018-19
  37. 34 CHAPTER - 6 SUBSIDIES , GRANTS AND TRANSFERS 2018-19 SUBSIDIES 6.1 In order to alleviate the impact of inflation on citizens, especially the poor segments of society, the Federal Government spends a fairly large sum on providing power and food subsidies. In the budget estimates 2017-18 subsidies were Rs 138,846 million; in revised estimates 2017-18 they increased to Rs 147,604 million due to increase in subsidy to KESC (i.e. for DISCO & K-Electric) and subsidy to fertilizer. Total subsidies for fiscal year 2018-19 has been estimated at Rs 174,746 million which increased by 25.9% and 18.4% over budget and revised estimates 2017-18. 6.2 In budget 2018-19, the allocation for subsidies to WAPDA/PEPCO forms the major component, which is 76.7% of the total allocation followed by subsidy to PASSCO with share of 10.9% and KESC with share of 8.8%. A total estimate of subsidies for budget 2018-19 is 0.5% of GDP. Table-27 provides the details: TABLE - 27 SUBSIDIES (Rs in Million) Classification Subsidy to WAPDA/PEPCO: Budget 2017-18 Revised 2017-18 Budget 2018-19 102,500 81,500 134,000 65,000 57,500 105,000 1 Inter-Disco Tariff Differential 2 Tariff Differential for Agriculture Tubewells in Balochistan 8,500 - 5,000 To pick up WAPDA/PEPCO receivables from FATA 10,000 10,000 12,000 4,000 - - 15,000 - - - 14,000 12,000 3 4 Inter-Disco Tariff Differential Arrears 5 Power Sector PSEs Reforms 6 Subsidy to WAPDA Contd…. Budget in Brief 2018-19
  38. 35 SUBSIDIES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 15,500 33,476 15,400 15,000 11,000 15,000 500 387 400 - 22,089 - Subsidy to USC for: 4,000 4,000 6,000 10 Ramzan Package 1,500 1,500 2,000 11 Payment of Sugar Arrears 2,000 2,000 3,000 500 500 1,000 16,545 17,545 19,045 13 Wheat Operation 2,000 700 1,500 14 Wheat Reserved Stock 5,000 5,000 5,000 15 Wheat supplied to Gilgit-Baltistan (Arrears) 8,045 8,045 8,045 16 Support for Wheat/Flour Export 1,500 1,500 1,500 - 1,000 2,000 - - 500 - 1,300 500 1 10,783 1 20 National Food Security & Research Division 1 1 1 21 Subsidy to Fertilizer - 10,782 - Subsidy to Others: 300 300 300 22 Sale of Wheat in FATA 300 300 300 138,846 147,604 174,746 Classification Subsidy to KESC: 7 To pick up KESC's Tariff Differential 8 For Tariff Differential Tubewells in Balochistan 9 for Agriculture Subsidy to DISCOs & K-Electric 12 Sale of Pulses, Rice, Tea etc. at subsized rates Subsidy to PASSCO for: 17 Support for Sugar Export 18 Reimbursement on account of Paddy Operation 19 Reimbursement on account of Donation of Wheat by the GOP Subsidy to National Research Division TOTAL SUBSIDIES: Food Security & Budget in Brief 2018-19
  39. 36 GRANTS AND TRANSFERS 6 .3 Grants and transfers to provinces and others for the year 2018-19 have been estimated at Rs 477,924 million as compared with Rs 430,230 million in budget estimates 2017-18 and Rs 461,638 million in revised estimates. The detail of grants and transfers to the provinces and others is given in the following Table: TABLE - 28 GRANTS AND TRANSFERS (Rs in Million) Classification I. GRANTS IN AID & MISCELLANEOUS ADJUSTMENTS A. SPECIAL GRANTS Budget 2017-18 Revised 2017-18 Budget 2018-19 26,000 26,485 28,000 22,000 24,985 24,000 - 383 - 12,000 14,251 14,000 - 43 - - Punjab - Sindh - Khyber Pakhtunkhwa - Balochistan 10,000 10,308 10,000 LUMP PROVISION 4,000 1,500 4,000 GRANTS TO OTHERS 404,230 435,153 449,924 - Contingent Liabilities 180,000 195,000 210,000 - Miscellaneous Grants 70,000 80,300 77,000 - Other outstanding Liabilities 20,000 20,000 20,000 - Pakistan Railways to meet their losses 40,000 38,500 37,000 B. II. Contd….. Budget in Brief 2018-19
  40. 37 GRANTS AND TRANSFERS (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 55 55 53 2,400 6,736 4,096 210 210 210 12,000 12,000 12,000 20 20 20 - Grants to AJK Government 40,000 40,000 49,000 - Grant-in-Aid to Gilgit Baltistan 27,500 27,650 29,500 - Grant to Bait-ul-Maal 6,000 6,000 5,000 - Wheat Subsidy to Gilgit Baltistan 6,045 6,045 6,045 - 2,638 - 430,230 461,638 477,924 Classification - National Internship Programme - Lump Provision for Relief etc. - Competition Commission of Pakistan - Reimbursement Transfers (TT) Remittances - of Telegraphic Charges on Home Pakistan Remittance Initiative - National Disaster Risk Management Fund TOTAL GRANTS (I + II): Budget in Brief 2018-19
  41. 38 CHAPTER - 7 LOANS AND INVESTMENTS 2018-19 7 .1 The financial assets of the Federal Government consist of investible funds and loans provided to Azad Jammu and Kashmir (AJK) and various agencies/institutions as well as government servants to enable them to meet their financial requirements. CURRENT LOANS & ADVANCES 7.2 Total current loans and advances have been estimated at Rs 49,076 million in budget 2018-19. The following Table provides the details: TABLE - 29 CURRENT LOANS & ADVANCES Classification 1 2 3 4 AJK for Repayment of Principal & Interest 7 Junagadh and Kathiawar Chiefs Loans/Advances to Employees of PNRA Loans/Advances to Friendly Countries Gilgit-Baltistan for Repayment of Principal and Interest Interest free Loans to WAPDA Operation and Maintenance, Hub Dam & Khanpur Dam GOP Loan to PCP, Islamabad 8 Loan to State Engineering Corporation 9 Current Loans to PIA 5 6 10 Loans and Advances to: - Federal Gov't Servants Islamabad - Federal Gov't Servants Lahore - Federal Gov't Servants Karachi - Federal Gov't Servants Quetta - Federal Gov't Servants Peshawar - Federal Gov't Servants Gilgit 11 Pakistan Mint Lahore 12 Loans to Pakistan Steel Mills Karachi TOTAL: Budget 2017-18 (Rs in Million) Revised Budget 2017-18 2018-19 13,714 1 15 500 13,710 1 15 - 14,494 1 15 500 - 4 6 40 - 1,577 40 - 55 38 20 - - 18,000 6,002 1,239 1,389 337 600 405 27 4,000 6,002 1,239 1,389 337 600 405 27 4,180 7,631 1,352 1,518 370 656 443 29 4,000 28,324 29,524 49,076 Budget in Brief 2018-19
  42. 39 DEVELOPMENT LOANS AND ADVANCES 7 .3 Development loans and advances are made by the Federal Government to Provinces, Government of Azad Jammu and Kashmir, Public Sector Enterprises (PSEs), Financial/Non-Financial Institutions, District Governments/TMAs, and Others to assist them in carrying out their development programmes. 7.4 Total development loans and advances (local and external) were estimated at Rs 595,212 million in the budget 2017-18, which have now been revised upwards to Rs 596,686 million in revised estimates 2017-18. For budget 2018-19, total development loans and advances have been estimated at Rs 461,539 million, showing a decrease of 22.5% over budget estimates 2017-18 and 22.7% over revised estimates 2017-18. 7.5 For budget 2018-19, development loans and advances (local) have been estimated at Rs 156,315 million, while development loans and advances (external) at Rs 305,225 million. The details are as in Table-30 below: TABLE - 30 DEVELOPMENT LOANS AND ADVANCES (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 1 Development Loans and Advances 264,274 265,621 156,315 2 External Development Loans and Advances 330,939 331,065 305,225 595,212 596,686 461,539 Classification TOTAL: Budget in Brief 2018-19
  43. 40 CURRENT INVESTMENTS 7 .6 The federal current investments for the year 2018-19 have been estimated at Rs 19,436 million as compared with Rs 19,949 million and Rs 28,790 million in the budget and revised estimates of 2017-18 respectively. The allocation for investment in 2018-19 is lower by 2.6% and 32.5% as compared with budget and revised estimates 2017-18 respectively. Table-31 provides the comparative position. TABLE - 31 CURRENT INVESTMENTS (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 1 GoP Contribution in Equity of Pak China Investment Co. Ltd. Islamabad 100 - 500 2 GoP Equity in GENCO holding Copmany Ltd. (GHCL) - 0.1 - 3 GoP Equity Investment against the liability of Peoples Steel Mills 5 - - 4 GoP Equity in Discos through CPPA-G for payment of Power Sector Payables - 20,000 - 12,000 - 11,000 6 Paid up Capital for the proposed Exim Bank of Pakistan 3,000 - 1,000 7 4th General Increase of Capital Stock Islamic Develoment Bank (IDB) 841 777 933 - 0.05 - 9 GoP Equity in DISCOs through PHPL for payment of DSL of STFF 4,000 8,010 6,000 10 Pakistan's Annual Contribution to Inter Governmental Group IF 24 (G-24) 3 3 3 19,949 28,790 19,436 Classification 5 Lump Provision Expenditure for Miscellaneous 8 Fifth General Increase Develoment Bank (ADB) TOTAL: of Asian Budget in Brief 2018-19
  44. 41 CHAPTER - 8 PUBLIC SECTOR DEVELOPMENT PROGRAMME (PSDP) 2018-19 8.1 The Public Sector Development Programme (PSDP) is the main instrument for improving the socio-economic conditions in the country and achieving the macroeconomic and development objectives and targets set by the government, which yield maximum benefits in the shortest possible time for the society. 8.2 For the year 2018-19 National Economic Council (NEC) has approved an overall size of PSDP at Rs 1,650 billion, which is 4.3% of Gross Domestic Product (GDP). 8.3 The Salient features of PSDP allocation for 2018-19 are as follows: - The size of national PSDP (Rs 1,650 billion) in the budget for 2018-19 showing a decrease of 21.9% over budget estimates 2017-18, while an increase of 6.5% over revised estimates 2017-18. - Federal PSDP for the year 2018-19 has been kept at Rs 800 billion, which is lower by 20.1% than budget estimates 2017-18 and higher by 6.7% than revised estimates 2017-18. - The share of Federal Ministries/Divisions in 2018-19 PSDP is Rs 420.4 billion indicating an increase of 11.3% over budget estimates 2017-18. - The Corporations' PSDP for 2018-19 has been placed at Rs 246.1 billion indicating a decrease of 35.3% over budget estimates 2017-18. - An amount of Rs 5 billion has been allocated in the budget 2018-19 to Pakistan Sustainable Development Goals (SDGs) and Community Development Programme. - Earthquake Rehabilitation and Reconstruction Authority (ERRA) has been allocated Rs 8.5 billion in the budget 2018-19 reflecting an increase of 13.3% over budget and revised estimates of outgoing fiscal year. - An amount of Rs 5 billion has been allocated in the budget 2018-19 to Special Provision for CEPEC Projects. - In the budget 2018-19, Rs 10 billion has been kept for FATA 10 year Plan. - In the budget 2018-19, an amount Rs 45 billion has been allocated to Relief and Rehabilitation of IDPs. Budget in Brief 2018-19
  45. 42 - An amount of Rs 45 billion has been budgeted for Security Enhancement in 2018-19 . - Rs 10 billion has been allocated for Prime Minister's Youth Programme in the budget 2018-19. - Gas Infrastructure Development Cess (GIDC) has been allocated Rs 5 billion in the budget 2018-19. - The Provincial Development Programme for 2018-19 has been estimated at Rs 850 billion as against Rs 800 billion in revised estimates 2017-18, showing an increase of 6.3%. 8.4 The following Table-32 indicates details of the size of Public Sector Development Programme (PSDP). TABLE - 32 SIZE OF PSDP (Rs in Million) Classification A. Federal Ministries/Divisions 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Aviation Division Board of Investment Cabinet Division Capital Administration & Development Division Climate Change Division Commerce Division Communications Division (other than NHA) Defence Division Defence Production Division Economic Affairs Division Establishment Division Federal Education & Professional Division Finance Division Foreign Affairs Division Higher Education Commission Budget 2017-18 Revised 2017-18 Budget 2018-19 377,870 310,109 420,375 4,349 160 2,108 142 4,677 125 1,116 5,188 815 1,200 2,464 785 665 13,906 803 1,500 13,660 535 4,468 270 13,247 351 3,136 - 14,481 641 2,810 70 175 2,962 18,936 200 35,663 2,316 15,675 32,950 4,337 16,951 200 35,830 Contd……. Budget in Brief 2018-19
  46. 43 SIZE OF PSDP (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 Housing & Works Division Human Rights Division Industries and Production Division Information & Broadcasting & National Heritage Division Information Tech. & Telecom Division Inter Provincial Coordination Division Interior Division Kashmir Affairs & Gilgit Baltistan Division Law and Justice Division Narcotics Control Division National Food Security & Research Division National Health Services, Regulations & Coordination Division National History & Literary Heritage Division National Security Division Pakistan Atomic Energy Commission Pakistan Nuclear Regulatory Authority M/o. Energy (Petroleum Division) Planning, Development & Reform Division Postal Services Division 10,386 306 2,737 8,092 47 569 5,433 300 1,775 812 1,538 3,044 15,667 210 2,470 2,920 13,401 1,644 3,046 3,553 24,008 43,644 1,200 220 42,835 844 120 44,706 1,025 251 1,614 885 1,808 48,701 28,062 25,034 273 100 15,085 322 554 105 12,201 287 16,521 551 28,340 300 943 16,799 - 4,157 - 16,240 370 Maritime Affairs Division Railways Division Revenue Division Science & Technological Research Division 39 States & Frontier Regions Division 40 Statistics Division 12,776 42,900 790 2,688 22,020 633 10,119 34,411 2,559 2,428 26,900 200 1,252 35,947 742 3,900 28,256 200 Classification 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 32 33 34 35 36 37 38 Contd……. Budget in Brief 2018-19
  47. 44 SIZE OF PSDP (Rs in Million) Budget 2017-18 Revised 2017-18 Budget 2018-19 3,500 218 36,750 3,500 21 35,740 4,700 280 79,000 380,630 410,622 246,125 60,909 84,901 36,125 319,720 325,720 210,000 C. Pak SDGs & Community Development Programme 30,000 21,770 5,000 D. Special Federal Development Programme 40,000 - - E. Energy for All 12,500 - - F. Clean Drinking Water for All 12,500 - - G. ERRA 7,500 7,500 8,500 H. Special Provision for CEPEC Projects 5,000 - 5,000 - - 10,000 J. Relief and Rehabilitation of IDPs K Security Enhancement 45,000 45,000 - 45,000 45,000 L Prime Minister's Initiative 20,000 - 10,000 M Gas Infrastructure Development Cess 25,000 - 5,000 1,001,000 750,000 1,112,000 800,000 850,000 2,113,000 1,550,000 1,650,000 Classification 41 SUPARCO 42 Textile Division 43 Water Resources Division B. Corporations 1 Power Division 2 National Highway Authority (NHA) I FATA 10 Year Plan Total Federal PSDP (A to M): N Provinces TOTAL NATIONAL PSDP (A to N): 800,000 Total Federal PSDP 2018-19 would be Rs 1,030 billion out of which Rs 230 billion would be self financing by the corporation/authorities and Rs 800 billion would be provided through budget 2018-19. Budget in Brief 2018-19
  48. 45 DEVELOPMENT EXPENDITURE OUTSIDE PSDP 2018-19 8 .5 Under the head of Development Expenditure Outside Public Sector Development Programme (PSDP), Rs 180,238 million have been allocated in this head in the budget 2018-19, reflecting an increase of 18.4% over budget estimates 2017-18 and 17.7% over revised estimates 2017-18. Table-33 provides the details. TABLE - 33 DEVELOPMENT EXPENDITURE OUTSIDE PSDP (Rs in Million) Classification 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Benazir Income Support Programme Crop Loan Insurance Scheme Livestock Insurance Scheme Credit Guarantee Scheme for Small Farmers Provision for Reconstruction of Afghanistan Subsidy to TCP for Import of Urea Fertilizer Provision for Misc. Dev. Exp. outside PSDP Grants for Pakistan Poverty Alleviation Fund Public Financial Management & Accountability to support services delivery programme Prime Minister's Interest Free Loan (PMIFL) Strategic Trade Policy Framework Textile Policy 2009-14 Duty Drawback of Local Taxes and Levies 2014-15 Local Taxes and Levies 2015-16 Local Taxes and Levies 2016-17 Technology Upgradation Fund Order, 2016 for Textile Sector Duty Drawback of Taxes Order 2016-17 Drawback of Local Taxes and Levies (Non-Textile) Order, 2017 Development Expenditure of FATA Outside PSDP Development Expenditure of SAFRON Outside PSDP Development Expenditure of Economic Affairs Division Outside PSDP TOTAL: Budget 2017-18 Revised 2017-18 Budget 2018-19 121,000 700 1,000 1,000 3,000 5,000 3,000 2,000 113,000 700 1,000 3,000 5,000 1,500 124,700 1,000 100 100 3,000 5,000 18,000 688 5,000 5,000 - 150 3,500 4,000 6,000 - 673 - - 500 500 - 4,000 700 18,500 10,000 1,500 2,627 4,000 - 3,000 - - 1,190 - - 1,284 - 152,200 153,174 180,238 Budget in Brief 2018-19
  49. 46 CHAPTER - 9 MEDIUM-TERM BUDGETARY FRAMEWORK (MTBF) 9.1 Medium-Term Budgetary Framework (MTBF) reform initiative is aimed at improving budget preparation process of the Federal Government. Since its full rollout, endorsed by the Cabinet in 2009, this reform initiative has made steady progress. 9.2 The MTBF includes the following key components: (1) An annual pre-budget analytical ‘Budget Strategy Paper’, which includes a 3year macro-fiscal framework, budget policies, and indicative ceilings (resource limits) for Ministries / Divisions. The Budget Strategy Paper is tabled in the Cabinet meeting where discussions on policy priorities, allocations, and performance against targets are held. To compile the Budget Strategy Paper, the Finance Division, Planning Commission, Federal Board of Revenue, and State Bank of Pakistan share their projections and discuss different scenarios and options. This component has led to greater coordination between technical and political levels of the Government in defining fiscal policy and benchmarks, and enhanced understanding of medium-term implications of current budgetary decisions. (2) Performance budgeting (also known as ‘output-based budgeting’). Through this mechanism the Principal Accounting Officers (Secretaries) are gradually being given greater autonomy over the distribution of ceilings as per their own policy priorities. Together with greater autonomy, a system of performance management is being introduced, which presents the budget by outputs (services delivered) as against inputs only (funding and material resources required). The output-orientation to the budget allows linkage of the budget with policy preferences, and provides a basis for defining and measuring performance. Through the use of mutually agreed indicators and targets, each Principal Accounting Officer is given a set of criteria against which the performance of the Ministry/Division is evaluated in terms of outputs generated from the utilisation of budgetary resources appropriated by the Parliament. This information is then presented to the Parliament in the shape of ‘Federal Medium-Term Budgetary Estimates for Service Delivery’ - also known as the MTBF Green Book. The Green Book is a part of the reform agenda to make the budget more transparent and comprehensive by linking budgetary allocations with policy and performance. Budget in Brief 2018-19
  50. 47 (3) Performance monitoring. The performance budgets prepared are being monitored by the Finance Division. Under this process, actual expenditure against appropriations and reasons for variations are compiled from Ministries / Divisions along with performance achieved vs targets. Budget Preparation Process 9.3 To achieve the objectives as outlined above, the Federal Government has improved its budget preparation process through the MTBF. Under the reformed process: • The Finance and Planning, Development Reform Divisions prepare a Medium-Term Macroeconomic Framework in consultation with various Government Ministries and the State Bank of Pakistan • Based on the macroeconomic situation and future projections, the Finance Division articulates its budgetary policy priorities and prepares a MediumTerm Fiscal Framework • The Finance Division and Planning, Development & Reforms Division work out, for each Principal Accounting Officer, medium-term Indicative Budget Ceilings (IBCs) that align resource allocation with the Government’s policies • The macroeconomic and fiscal frameworks, together with the IBCs, are presented to the Cabinet through the 'Budget Strategy Paper' (BSP) for approval • Based on these IBCs, ministries prepare their budgets that are reviewed for quality assurance by the Finance Division and Planning, Development and Reform Division • The Secretaries of Finance, Planning, Development and Reform, and Economic Affairs Divisions jointly chair the Priorities Committee meetings that discuss policy and budget priorities with each Principal Accounting Officer • The Annual Plan Coordination Committee (APCC) discusses the publicsector investment proposals with the Federal and Provincial Governments • The National Economic Council (NEC) approves the Public Sector Development Programme (PSDP) of the Federal and Provincial Governments • The finalised budget is presented in the Cabinet for endorsement and Parliament for appropriation. Budget in Brief 2018-19
  51. 48 MACROECONOMIC INDICATORS 9 .4 Macroeconomic Indicators for 2017-21 are provided in Table - 34 below: TABLE - 34 Consolidated Fiscal Projections Budget 2017-18 Revised 2017-18 Budget 2018-19 Forecast 2019-20 2020-21 Real GDP Growth (%) 6.0 5.8 6.2 6.5 7.0 Inflation (%) 6.0 4.5 6.0 6.0 6.0 (as percentage of GDP) Total Revenue 17.2 16.0 16.3 16.4 16.5 - Tax Revenue 13.7 13.2 13.9 14.1 14.3 - FBR Tax Revenue 11.2 11.4 11.6 11.8 12.1 - Non Tax Revenue 3.5 2.8 2.4 2.3 2.2 Total Expenditure 21.3 21.5 21.2 21.1 21.0 - Current 15.0 16.6 16.5 16.1 16.0 - Development 6.3 4.9 4.7 5.0 5.0 Fiscal Balance -4.1 -5.5 -4.9 -4.7 -4.5 2.2 -0.6 -0.2 0.3 0.5 Total Public Debt(Gross) 61.4 70.1 68.0 65.2 62.1 Total Public Debt-(Net) 59.2 64.9 63.3 61.1 58.6 35,919 34,396 38,388 43,458 49,452 Revenue Balance GDP at market prices (Billions) Budget in Brief 2018-19
  52. 49 CHAPTER - 10 CLIMATE CHANGE BUDGETING 10 .1 Climate budgeting seeks to align and scale up the funding of national climate change priorities through the budget process. Increased availability of international climate finance, coupled with mounting evidence of the financial, material and human losses incurred over recent years due to climate-related phenomenon such as more frequent and intensive floods, heat waves, and cyclonic activities rationalise efforts to better translate climate strategies and action plans into budgetary commitments. 10.2 Pakistan ranks amongst the top ten countries most vulnerable to climate change. To increase its resilience, the government has taken some critical steps to systematically respond. The 2016 Climate Change Act envisages a new governance architecture to coordinate and implement climate policy priorities across levels of government and in 2015 an implementation framework for the 2012 National Climate Change Policy was also adopted. 10.3 Under the Paris Agreement on Climate Change, Pakistan has stated its intention to reduce its 2030 projected GHG emissions by up to 20%, subject to availability of international funding support to help meet the estimated cost of US$ 40 billion at current prices. The Pakistan Nationally Determined Contribution (NDC) under this international agreement also affirmed government’s commitment to intensify efforts for policies and measures to adapt to climate changes. 10.4 A Climate Change Financing Framework (CCFF) was launched by the Government of Pakistan in late 2017. This outlines a reforms agenda for mainstreaming climate change in planning, budgeting, and public financial management systems. Some of the reforms being implemented by the government include: Budget in Brief 2018-19
  53. 50 • Operationalising a budget coding and tracking system dedicated to climate expenditures, using data maintained by the Controller General of Accounts (CGA). This system will afford policymakers with more timely and transparent information on budgetary spending at both national and sub-national levels, enabling more informed investment decisions. It systematizes in real-time information previously obtained through the ‘Climate Public Expenditure and Institutional Review’ (CPEIR) diagnostics carried out in 2015 and again in 2017. The process of tracking provincial climate expenditure and integrating it at federal level has also begun. • The Ministry of Climate Change (MoCC) has shared a proposal for revising the PC-1 template with the Ministry of Planning, Development and Reforms. This will facilitate basic climate change analysis at the project formulation stage. Further, MoCC is supporting the Ministry of Water Resources in formulating climate-responsive Output Based Budget (OBB)/MTBF as a pilot, in line with the CCFF. The approach will be replicated across the federal government in later years. • The MoCC also intends to designate focal persons in relevant sector ministries to steer the climate budgeting process and to support broader capacity building to in line ministries to comply with relevant guidelines in the budget call circular. 10.5 The Finance Division and MoCC are leading these reforms which also involve Federal Ministries/Divisions that undertake climate change initiatives. These reforms are aimed at building a more transparent, climate change responsive public financial management system. These efforts will result in a stronger implementation of the climate policy and more robust tracking of Pakistan’s international commitments. Budget in Brief 2018-19
  54. 51 WORKING OF FISCAL DEFICIT AND FINANCING BUDGET 2018-19 (Rs. in Billion) Working Deficit Financing of Deficit A) Federal Revenue (net) 3,070.4 Gross External Loans B) Total Federal Expenditure (i+ii) 5,246.2 Less Repayments 775.9 i) Current Expenditure 4,178.6 Long Term Foreign Loans 601.8 ii) Development and Net Lending (a+b+c) 1,067.6 Short Term Foreign Loans 174.2 a) Federal PSDP 800.0 i) Net External Financing 342.1 b) Other Development Expenditure 180.2 ii) Domestic Financing (a+b) 1,548.1 c) Net Lending 87.4 a) Bank Financing 1,015.3 C) Federal Deficit (A-B) Estimated Provincial Surplus -2,175.8 285.6 of which SBP Financing 0.0 b) Non Bank Financing 532.8 Public debt 406.1 Public Account 126.7 Privatization Proceeds Overall Fiscal Deficit % of GDP -1,890.2 -4.9% 1,118.0 Total Financing of Deficit (i+ii) % of GDP 0.0 1,890.2 4.9% Budget in Brief 2018-19
  55. Glossary of Terms Bank Borrowing Includes borrowing from the State Bank of Pakistan and Scheduled Banks Capital Receipts Income from proceeds of borrowing , money received in repayment of loans, recoveries of advances and investments, proceeds of savings schemes, net receipts from transactions under deposit, and remittances Community Services Receipts Income from rents of government buildings, land, guest houses, and hostels, etc. Current Expenditure Include interest payments, pension, defence affairs & services, grants & transfers, subsidies, and running of civil government Development Expenditure Include federal PSDP, development loans & grants to provinces, and other development expenditure (outside PSDP) Direct Taxes Income tax, workers welfare fund and capital value tax (CVT) Disbursements Government investments, loans, advances and others, and repayment of short term credit External Resources Include project and programme loans, foreign loans & credits, and foreign grants Grants Financial support to provinces, organisations, and industries for contingent liability, to fulfill losses, remission of loans, etc. Gross Revenue Receipts Sum of tax revenue and non-tax revenue (before excluding provincial share) Indirect Taxes Customs, sales tax and federal excise. Contd……..
  56. Glossary of Terms Internal Resources Include net revenue receipts , net capital receipts, and estimated provincial surplus Net Capital Receipts Capital receipts minus disbursements Net Lending to Others Government investments, loans and advances from Public Sector Enterprises (PSEs) minus recoveries of loans and advances from PSEs Net Revenue Receipts Gross revenue receipts minus provincial share Non-Tax Revenue Income from property and enterprises; receipts from civil administration and other functions; and miscellaneous receipts of the federal ministries, divisions and departments Other Development Expenditure Other development expenditure comprises development expenditure of Federal Government outside the PSDP Other Taxes Islamabad Capital Territory (ICT) Tax, Airport Tax, Gas Infrastructure Development Cess (GIDC), Natural Gas Development Surcharge and Petroleum Levy. Provincial Share Provincial share in federal taxes and straight transfers Provincial Surplus Provincial government deposits with State Bank of Pakistan Resources Include internal resources Tax Revenue Income from direct, indirect and other taxes Total Outlay / Expenditure Includes current expenditure and development expenditure and external financial
  57. 52 BUDGET AT A GLANCE FOR THE FISCAL YEAR 2018-19 (Rs. in Billion) RECEIPTS EXPENDITURE TAX REVENUE 4,888.6 A. CURRENT 4,178.6 - FBR Taxes 4,435.0 Interest Payments 1,620.2 - Other Taxes 453.6 Pension NON-TAX REVENUE 771.9 Defence Affairs & Services a) Gross Revenue Receipts 5,660.5 Grants and Transfers 477.9 b) Less Provincial Share 2,590.1 Subsidies 174.7 I. Net Revenue Receipts (a-b) 3,070.4 Running of Civil Govt. 463.4 II. Capital Receipts (Non-Bank) 532.8 III. External Receipts (net) 342.1 B. DEVELOPMENT 1,067.6 IV. Estimated Provincial Surplus 285.6 Federal PSDP - V. Bank Borrowing VI. Privatization Proceeds TOTAL RESOURCES (I to VI) 1,015.3 0.0 5,246.2 342.0 1,100.3 800.0 Net Lending 87.4 Other Dev. Expenditure 180.2 TOTAL EXPENDITURE(A+B) 5,246.2 Budget in Brief 2018-19