Friday, July 19, 2024

Pakistan Budget 2024-25 May Impact Economic Development

Immigration News

Khaama Press
Khaama Press
Khaama Press is the leading news agency of Afghanistan with over 3 million hits a month.

Islamabad, Pakistan — The Pakistan Budget 2024-25, presented by Finance Minister Muhammad Aurangzeb, sets a tax revenue target of 13 trillion rupees ($46.66 billion), a 40% increase from the previous year. Despite hopes for economic relief, the budget is seen by many as exacerbating existing economic challenges.

Pakistan is navigating significant economic turmoil, marked by high inflation, low growth, and a depreciating rupee. The government aims to achieve a 3.6% GDP growth, but experts warn that the ambitious tax targets could overburden sectors and lead to further inflation. The informal nature of a large part of Pakistan’s economy complicates efforts to broaden the tax base, potentially leading to the failure of the increased tax revenue strategy.

The budget allocates Rs 2.122 trillion for defense, a nearly 15% increase from the previous year. This hike is controversial given Pakistan’s efforts to secure additional IMF loans to manage its fiscal deficits. ARY News reported that the government is in talks with the IMF for a loan estimated between $6 billion to $8 billion to avert a default​​.

The budget fails to include funding for minority welfare, a stark contrast to the previous year when Rs 100 million was allocated for minority development. This omission is likely to worsen conditions for minority communities who already face significant challenges.

The budget introduces an 18% GST on essential items like flour, pulses, sugar, and baby food, which could exacerbate malnutrition and economic hardship for the middle and lower classes. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Karachi Chamber of Commerce and Industry (KCCI) have criticized these measures, arguing that they will stifle business growth and increase the cost of living, reported by Samaa TV​.

Despite an increase in the Benazir Income Support Programme (BISP) budget by 27%, the program’s impact on poverty alleviation is questioned. Critics argue that without substantial employment opportunities, cash transfers alone cannot lift people out of poverty. The budget also lacks significant measures to address the high unemployment rate, which stood at 6.9 million at the end of last year​.

The budget has been criticized for not providing adequate support to the IT sector, despite its strong performance in recent years. Increased levies on imports of equipment and a rise in GST from 5% to 10% on hardware could hamper the industry’s growth. Additionally, changes in the taxation of exports have raised concerns among trade bodies like the Rice Exporters Association of Pakistan (REAP), which fear these measures will harm export competitiveness, as highlighted by Geo News​.​.

The Pakistan Budget 2024-25 reflects a complex balancing act between achieving fiscal stability and addressing the pressing needs of its population. While aiming for economic recovery and growth, the budget’s heavy tax burden and increased defense spending raise concerns about its impact on ordinary citizens and business sectors. The exclusion of minority welfare funding and the high taxes on essential goods highlight the challenges the government faces in creating an inclusive and balanced economic policy​.

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