What is the budget of a country?
The Budget is the government’s yearly announcement about how it’s going to spend the nation’s money.
Budget in Pakistan
In Pakistan, the general budget is known as the federal budget. In the constitution, it is referred to as the Annual Budget Statement (ABS). The budget is prepared and presented by the federal government before the lower house of the National Assembly of Pakistan every year. It is a statement of the estimated receipts and expenditure of the Federal government in a particular financial year. The financial year starts on 1st July and ends on 30th June.
The budget cycle usually has four stages:
∙ Budget formulation, when the budget plan is put together by the executive branch of government;
∙ Enactment, when the budget plan may be debated, altered, and approved by the legislative branch;
∙ Execution, when the policies of the budget are carried out by the government; and
∙ Auditing and assessment, when the actual expenditures of the budget are accounted for and assessed for effectiveness.
Pakistan Budget 2020-2021, by PTI government, main points
Amid the world economic downfall, or almost one can say the economic downfall, Pakistan Tehrik-e-Insaf government has presented its federal budget of 2020-2021. It a budget of 7136 billion rupees. Imran Khan and his financial team were working hard to meet the nowadays challenges to the economy of Pakistan until march, but unfortunately, corona happened, and for almost two to three months economy sat down. This is a neutral budget and it feels like numbers will have a second review somewhere the middle of the year. With a 1.4% increase in expenditure as compared to the last year’s expenditures, this year Pakistan’s total expenditures will be 7136 billion Rs which was 7036.3 billion Rs last year.
Budget Allocation and Expenditure of Government
Where and how much Pakistan spends its budget is an important point to know. There are some main areas where most of the budget is spent.
- Debt services
- Public Sector Development Fund
- Government machinery expenditures (Civil)
- Education, Health and Science
Let us have a glance at what is the division of the expenditure this year as compared to the last year.
Debt services will have 2946 billion Pakistani rupees which were 2891 billion rupees last year. The defense budget for 2020-2021 is 1289 billion rupees which were 1153 last year. PSDP will just have 650 billion rupees as compared to 700 billion rupees in the previous year, and 476 billion rupees are allocated for Civil functioning.
The revenue target for 2020-2021
Gross federal revenue target of government for the 2020-2021 budget is 6,573.2 billion rupees. The main source of revenue is the Federal Board of Revenue (FBR), and it has a revenue target of 4,963 billion rupees. 1108.9 billion rupees target is set against non-tax revenue and the left 501.3 is for other sources.
The federal government will have to pay 2874 billion rupees to provinces as NFC award and in return provinces will pay taxes of 242 billion rupees.
Total expenditure = 7,136 billion rupees
Gross revenue = 6573.2 billion rupees
Budget Deficit = 7,136 bn – (6573.2 bn – 2874 bn + 242 bn)
Budget Deficit = 3200 bn rupees