Pakistan unveils 2022/23 budget, aims for 5% growth

© Reuters. A shopkeeper listens to a customer as he sells groceries at a shop in a market in Karachi, Pakistan June 10, 2022. REUTERS/Akhtar Soomro

(Corrects federal expenditure figure to 9.5 trillion rupees from 9.5 billion rupees)

By Manoj Kumar

(Reuters) - Pakistan Finance Minister Miftah Ismail on Friday unveiled the budget for the 2022/23 fiscal year starting July, aiming for economic growth of 5% amid pressure to control the fiscal deficit and secure International Monetary Fund bailout money.

These are the highlights from the 2022/23 budget:

GDP/DEFICIT

* Targets 5% economic growth for 2022/23 fiscal year, starting July, after an estimated annual growth of 5.97% for the current fiscal year

* Fiscal deficit target set at 4.9% of GDP for 2022/23 vs revised target of 7.1% in 2021/22

* Tax to GDP ratio set at 9.2% for 2022/23 vs 9% in 2021/22

RISKS TO ECONOMY

* Conflict between Russia and Ukraine poses a risk to Pakistan's economy

* Higher crude oil, food prices could stoke high inflation

* Monetary tightening and fiscal consolidation may slow down economic growth

EXPENDITURE

* Federal expenditure estimated at 9.5 trillion rupees for 2022/23

* Development expenditure set at 800 billion rupees for 2022/23

* Pakistan to spend 699 billion rupees on targeted subsidies in 2022/23

* Defence expenditure set at 1.52 trillion rupees for 2022/23 vs 1.48 trillion rupees in 2021/22

* Budget allocates 90.55 bln rupees for education in 2022/23 vs 90.86 bln in 2021/22

* Pakistan cuts health budget to 19.03 bln rupees for 2022/23 vs 154.49 bln rupees in 2021/22

REVENUE

* Revenue target set at 7 trillion rupees for 2022/23

* Aims to raise 96.41 billion rupees from privatisation in 2022/23

* To impose 2% additional tax on income taxpayers with 30 million rupees annual income

* Expects 300 bln rupees receipts from central bank in 2022/23 vs 474 bln rupees in 2021/22

INFLATION

* Budget forecasts average inflation of 11.5% in 2022/23 vs 11.7% in 2021/22

* Consumer-price-index based inflation rose in May to 13.8% year-on-year, the highest in two-and-half years.

* Pakistan raised petrol and diesel prices by around 20% earlier this month

INTERNATIONAL TRADE

* Pakistan's export target set at $35 billion for 2022/23

* Import target set at $70 billion for 2022/23

* Trade deficit target set at 2.2% of GDP in 2022/23

* Budget forecasts remittances of $33.2 billion in 2022/23

AUSTERITY MEASURES

* Ban on buying new cars for govt officials

* Aims cuts in fuel consumption by govt officials

* Funds for debt servicing estimated at 3.9 trillion rupees in 2022/23

OTHER INITIATIVES

* To raise tax exemption limit for salaried income taxpayers

* Announces to promote special economic zones to boost manufacturing

* Offers 5-year tax holiday for film production industry

* To set up 250 mini-stadiums to promote sports

* To exempt import of solar panels from tax

* Exempts 30 pharmaceutical products from customs duty

* Proposes 15% hike in govt employees' salaries

($1 = 202.00 Pakistani rupees)

(This story corrects federal expenditure figure to 9.5 trillion rupees from 9.5 billion rupees)