Zubair Yaqoob
Karachi
Blueprint of the FY21 Budget whereby the key objective of the government is the revival and stabilization of the economy after being pinned down from the ongoing COVID-19 pandemic, via relief and supportive measures for the masses as well as the business community whilst constraining fiscal imbalances and meeting IMF’s revenue collection target.
The analysts at Arif Habib Limited have summarized some key expected measures. Counter Coronavirus and ensure social security. Allocation of PKR 1.0trn to fight the ongoing COVID-19 contagion with likely allocation to the following; Daily wagers cash allocation, higher allocation to the Ehsaas program (for vulnerable families), subsidized electricity for lifeline consumers, enhanced allocation to Utility Stores Corporation (USC), higher allocation for health and food supplies, allocation to the National Disaster Management Authority (NDMA), and lowering down taxes on basic essential goods.
SBP has already introduced several measures to contain the economic fallout post Corona pandemic such as 525bps cut in interest rate, announcement of a relief package for households, industries and SMEs, refinancing scheme to support employment and avert layoffs, relaxation in credit requirement for exports and imports, and facilitation of new investments via subsidized interest rates for BMR activities.
Higher allocation of social expenditure under the federal PSDP. Revive economic growth, increase PSDP allocation along with incentives for industries.
The government has set GDP target for FY21 at 2.3% (FY20 estimated at -0.38% primarily due to the coronavirus pandemic). Allocation of PKR 630bn under the Federal PSDP along with an additional PKR 200bn under Public Private Partnership Authority (PPPA), reduction of custom and excise duty by 3% on imports of machinery for agriculture and power sector, removal of additional custom duty on different products to support local production and revive demand, and removal of import duty on plant and machinery. Cascading duty structure on import of raw materials, intermediate goods and finished goods. Mobilize revenue measures to achieve the additional collection target for next year.
