Day: June 5, 2014

Islamabad, June 05, 2014 (PPI-OT): Bismillahir-Rehmanir-Rahim

PART-I

Mr. Speaker,

1. As I rise to present the second budget of the democratic government, I want to thank Allah (SWT) for remarkable mercies He has bestowed on us by giving enormous success to the policies and initiatives we announced in our first budget. This success is the outcome of a democratic process that has allowed people to choose their representatives and they, in turn, are working to achieve their aspirations.

2. When we started our journey, we were facing the most daunting task of repairing a broken economy. We embarked on a very comprehensive agenda of economic reforms aimed to reinvigorate the economy, spur growth, maintain price stability, provide jobs to the youth and rebuild the key infrastructure of the country.

Prime Minister Mohammed Nawaz Sharif set a rare example of foresight, courage and political sagacity when he did not shy away from taking painful decisions; decisions that were surely unpopular but imperative for restoring economic health of the country.

Today, with the blessings of Allah, I say in all humility that we have not only restored the health of the economy but have put it firmly on the path of stability and growth. I by no means, am claiming that we have achieved our highest goals, however, I can gratefully and with humility, inform this House that Pakistan today is much more strong, healthy and prosperous than where it was one year before. But we need not be complacent with achievements so far.

We are far from our destination. Therefore, we have to continue to strive and move forward, so that we achieve the status and stature among the nation, which we deserve, given our abilities. This is a national agenda and we hope that in order to achieve this, both side of the Parliament shall guide and favour us with valuable suggestions.

Review of Economic Performance 2013-14

Mr. Speaker:

3. I would like to place before this august House the following key economic indicators, based largely on latest data, which point to an unmistakable revival of the economy:

(a) Economic Growth, which had averaged around 3% in the five years before our government, has been projected at 4.14%as per the revised estimates. This is the highest growth in the last six years;

(b) Per Capita Income, which stood at $1339 last year is projected to increase to $1386, showing a growth of 3.5%;

(c) Industrial Sector, which grew by a meagre 1.37% during Jul-Feb last year, has registered a growth of 5.84%, aided by increased availability of electricity and better management of available gas supplies. This is also highest in the last six years;

(d) Inflation, which had averaged around 12% in the five years before our government, was recorded at 8.6% for Jul-May 2013-14, that too despite the fact that we had taken difficult decisions to raise taxes and rationalize energy prices;

(e) FBR revenues, which had registered one of the poorest performances of in the recent past of 3% growth in 2012-13, are up by 16.4%, rising from Rs.1,679 billion to Rs.1,955 billion in the first 11 months of the current year;

(f) Fiscal deficit, which was registered at 5.5% during Jul-Apr 2012-13, has been brought down to only 4.0% for the same period this year. Here I would like to remind that in the revised estimates for 2012-13, we were told that the fiscal deficit will be 8.8%. We had taken office only a few days earlier but even then in the three weeks of June 2014, concerted efforts were made to economize on spending. The result was that actual deficit was brought down to 8.2%. This year, the target was to reduce deficit to 6.3%, but we are achieving a deficit of 5.8%, which is an excellent achievement;

(g) Credit to Private Sector, which was registered at Rs.92.5billion during 1st July 2012 to 9thMay 2013has increased to Rs.296.4 billion for the same period this year, showing a growth of 218% and reflecting increased investment activity in the private sector, thanks mainly to reduced borrowings by the government, mainly from SBP, which were completely eliminated from a level of Rs.417 billion last to a negative Rs.11 billion during this year;

(h) Exports were recorded at $21billion during Jul-Apr 2013-14 compared to $20.1billion last year, showing an increase of 4.24%;

(i) Imports were recorded at $37.1 billion during Jul-Apr 201314 compared to $36.7 billion last year and showing a marginal growth of 1.2%. However, imports of machinery have increased by an impressive 11% an indication of investment activity;

(j) Remittances, which were recorded at $11.6 billion during Jul-Apr 2012-13, rose to $12.9 billion for the same period this year, showing an increase of 11.5%, which is remarkable and for which I salute my expatriate Pakistanis for playing such a critical role in country’s economy;

(k) Exchange Rate, which experienced some instability due to speculative activity and initially declining reserves due to heavy repayments due from previous IMF loan, has been successfully stabilized and significantly appreciated subsequently. The speculators had thought that government would sit idly while they play havoc with the dollar.

They had pushed the rate to approximately Rs.111on 3rd December, which was totally unacceptable, as it had no economic justification. While dealing sternly with them we have expended serious efforts to stabilize the reserves position and also improved the basic economic indicators. Since 3rdDecember 2013, the rupee has appreciated by 11%. It has been trading in the range of Rs.98-99 for nearly three months, and this is the single most important indicator of economic stability as it affects a large number of other variables like prices and cost of production. A stable exchange is the lynchpin of a stable economy;

(l) Foreign Exchange Reserves, which had declined to a precarious level when in June 2013 SBP they stood at $6 billion, of which $2 billion were due to a swap that was payable in August. More importantly, besides regular debt servicing, a payment of $3.2 billion was due to IMF, bulk of which in the first half of the fiscal year.

On 10th February 2014, country’s reserves had further declined to $7.58 billion, of which SBP reserves amounted to a meagre $2.70 billion and those of commercial banks amounted to $4.88 billion. Many had predicted that Pakistan would soon default. It is from such a precipice that we have pulled the economy back and put it in on sound footing.

For reasons I will be alluding to in my speech, foreign exchange reserves of the country have entered safe territory and no longer pose any risk to the economy. Even though reserves at present stand at around $13.5 billion, we will be pushing them to $15.0 billion, much in advance of our target to achieve this level by 31stDecember.

(m) Karachi Stock Exchange Index, which stood at 19,916 on 11 May 2013, the day the elections were held, has continuously scaled new heights and stood at 29,543 on 29 May 2014, showing an increase of 46%. Also, this increase meant an increase of approximately 39% in market capitalization both in rupees and dollars.

(n) Incorporation of New Companies, which was recorded at 3212 during Jul-Apr last year has increased to 3655 during the same period this year, showing an increase of 13.79%;

4. In addition to above, we have achieved certain results that have eluded the previous government for its five year term:

(a) Euro Bond: Every year, since 2007-08, a provision had been made to raise foreign exchange resources through the issuance of Euro Bonds, which were last issued in 2006 and each year either no efforts were made as performance of the economy did not warrant or once a team on the road shows aborted the attempt for lack of interest and demand for Pakistan bond. And please note that this was an exchangeable bond with equity in OGDCL, a company registered and traded in London Stock Exchange. Allah has been extremely kind in making our efforts remarkably successful in the very first year of our government.

After achieving economic stability we immediately embarked on raising resources from the international capital market. We had set a modest target of $500 million. As we completed the road shows on 7th April 2014 and briefed investors about our policies and results so far achieved, we received an unprecedented response from them.

Against our target of $500 million, investors offered $7.0 billion, which meant nearly 14-time oversubscription. Encouraged by this phenomenal response, and keeping in view our pressing needs for building reserves, we decided to accept $2.0 billion of offers. The pricing was internationally competitive and significantly better than the prices at which we are raising resources domestically, even after accounting for possible exchange rate adjustments. More importantly, the foreign resources so raised have allowed us to retire domestic debt that is more expensive, and enabled greater flow of credit toward the private sector, as I have already noted.

(b) Resumption of Program Lending: For a long time, and largely due to failure to implement the previous IMF program the country was denied access to program lending both by World Bank and Asian Development Bank (ADB).

These loans, particularly the cheap financing from the World Bank, are given for budgetary support and augment foreign resource availability for the purpose of balance of payments. The high quality of economic management undertaken by the government has inspired the confidence of both these institutions and we have succeeded in securing $1.4 billion from these two institutions in the two key sectors namely energy reforms and competitive and growth support reforms.

(c) Auction of Spectrum License: Another notable achievement of our government is the successful auction of radio spectrum license of 3G and 4G. This is again an area where budget provision of Rs.50-79 billion has been consistently made since the budget of 2009-10 without any success. Even though we had raised the budgetary provision to Rs.120 billion we succeeded in realizing our goal.

Not only have we achieved our target price, through a built in incentive mechanism that prompted two of the four winners to make upfront payment of 100% price, we still have two more licenses that we will sell during the next fiscal year. All of this we have achieved with total transparency, competition and in full view of the world. Pakistan has lagged behind in introducing new technologies but we have removed this obstacle.

Those who have purchased these licenses are extremely bullish in their assessment of Pakistan’s growth potential. To understand the potential of what is in store for economic growth from this sector, it may be noted that even though we have more than 130 million cell phone subscribers, we have less than 10% penetration of broadband (data transmission), which will make all Smartphone connected to internet and thereby all users to take advantage of global connectivity. A new wave of economic growth is likely to be spurred from the introduction of this technology in the country.

(d) Revival of the Privatization Program: The privatization of public sector assets, based on strategic partnership or through divestment in the capital market, was one of the key reforms we had proposed in our Manifesto and duly reflected in the budget strategy announced last year.

This is again an area that lied dormant and unattended for last many years, as the previous government, despite making an announcement and short-listing 65 entities for this purpose, could not succeed. We have reinvigorated the program with considerable effort and injected new vigour in its execution, as per the program charted out by the previous government.

Before the close of the calendar year, we would be divesting government shares in HBL, UBL, ABL and partially increasing the public listing of PPL and OGDCL. We have also appointed financial advisers for various public sector corporations where we plan to establish strategic partnership with private sector investors. These are those corporations that are burdening the public sector resources by their constant bleeding.

The proposed strategic partnership will transform them into profitable organizations and remove their burden on the exchequer. Furthermore, besides bringing much needed foreign investment in the country, this process will help lowering the debt burden of the country and make more resources available for investing in the poverty reducing programs in accordance with the privatization law.

I would like to assure this House that while pursuing this program, our government will not let the interests of workers and employees of public sector corporations compromised. Their welfare and rights will be duly protected.

(e) Import of LNG: Yet an important area that eluded others has been the plan for import of LNG in the country. Our present supplies barely meet 50% of our demand. Import of LNG is critical for our industry, power sector and fertilizer production. We had invited private sector to invest in a terminal for receiving 200 MMCFD of LNG to be expanded to 400 MMCFD. We have succeeded in awarding, again through a transparent and competitive process, the work of building the terminal at the Port Qasim. The work on the terminal has started and within one year the flow of gas is likely to begin.

We have also rolled out the process of procuring 3.5 million tons of LNG from the international market, which is again done through a competitive process.

5. From what I have stated above, it can be seen that it is a picture of an economy that is not facing any threat of instability. It is in fact poised to take off toward a sustained path of growth. Investments are re-bounding, confidence is building and people are forming expectations of a better tomorrow. It is indeed the results of a consistent and credible policy regime that the government has fashioned and practiced.

Mr. Speaker:

6. You would recall that when presenting the first budget of the Government, I had outlined the vision that is guiding our economic policies. The six elements of the vision were:

(a) promotion of trade and investment and protection of economic sovereignty;

(b) making the private sector primary engine of economic development;

(c) public investment to cater for building a strong infrastructure of roads, highways, railways, ports, water, hydro-power and related infrastructure;

(d) equitable sharing of the burden of development by eliminating the culture of tax exemptions and concessions and recovering cost of public services to ensure their sustainable supplies;

(e) practicing austerity and frugality in public expenditures and containing them within the available resources; and, (f) protecting the weak and vulnerable segments of population both by insulating them from inflationary pressures as well as giving cash grants to mitigate the adverse impact of economic adjustment and reforms.

7. We have scrupulously followed the vision we have set out for the economy. In every aspect of the vision, we have acted as we promised.

The brief description of our performance, given above, and what will be highlighted later in this speech, exemplifies the faithfulness and seriousness with which we are working to realize this vision. This is a reflection of a responsible representative government that is answerable to Parliament and the people who have voted it to office. And as we move to the second year of our government, the new budget will continue to reflect the same spirit and commitment as embedded in this vision.

Main Elements of Budget Strategy

Mr. Speaker

8. I would now like to draw your attention to the main elements of the budget strategy we are adopting for the next fiscal year.

(1) Reduction of fiscal deficit: We will continue to reduce the fiscal deficit still further from 5.8% of GDP to 4.9% of GDP;

(2) Raising Tax Revenues: Although I will give details in the second part of the speech, this reduction in deficit will be achieved through a combination of better tax collection and tight expenditure policy.

(3) Arresting Inflationary Pressures: We have successfully warded off the inflationary pressures that were inevitable due to difficult decisions we took in the first budget.

As I noted, inflation has been kept firmly in the single digit territory. We gave more than Rs.20 billion in subsidy to avoid passing on the petroleum price increases. In the last one year, in nearly 8 months either prices were unchanged or decreased. The following developments will further strengthen the inflationary outlook going forward:

i. Continued reduction in deficit;

ii. Borrowings from SBP were eliminated during this fiscal year and next year these will be further brought down.

iii. The shift toward foreign borrowings we have contracted carry an average cost of less than 5%, which is considerably lower than the domestic cost that is averaged more than 12%. This will save us Rs.26 billion annually in interest payment and will help reduce the cost of debt servicing;

iv. Regular price monitoring is being undertaken with a view to ensure adequate supplies of all commodities and maintain stable prices.

Apart from the ECC that regularly reviews price situation, a price monitoring committee comprising all federal and provincial ministries and departments headed by Finance Minister also meets every two months for more coordinated approach toward maintaining price stability. Provincial Governments have established extensive networks of Juma and Itwar bazaars all across the country.

These bazars provide additional avenues of purchasing essential items at considerably lower prices than those prevailing in the markets. Remedial measures are taken whenever shortage of an essential commodity is noticed. Tariff, taxation and trade policy instruments are used to stabilize supplies and prices by making appropriate adjustments in duties, sales tax and income tax.

(4) Continued Focus on Energy Crisis: The 4Es we have given in our Manifesto refer to economy, energy, education and extremism. Thus energy occupies a central position in our program. We had inherited an energy sector that was at brink of total collapse. Load shedding was running at 16 hours in urban and 20 hours in rural areas. A gigantic circular debt of more than Rs.500 billion had stranded a sizable amount of capacity for want of liquidity.

Critical projects, such as Neelum-Jehlum and Nandipur, were delayed or nearly abandoned due to sheer negligence. We were not deterred by the enormity of the challenges facing the sector as we realized that without fixing this sector no realistic hope of economic revival could be made. We settled the circular debt and freed up and added some 1700 MW in the national grid.

These initiatives have paid off as the provisional figures of national accounts show that the value-added in the power sector increased by 3.72% as against a negative growth of 16.33% last year. But more importantly, we are working on a comprehensive program to add more power, improve energy mix to reduce the need for tariff increase, attract private sector investment and invest in transmission and distribution system to improve the efficiency of the entire power sector. I will be mentioning these initiatives in the context of the development plan;

(5) Exports Promotion: An emerging challenge on the horizon is the growth in exports critically needed to support a stable balance of payments over the medium to long term. Since 200001, our exports have grown at the rate of 8% compared to a growth rate of 13% for imports, leading to a large trade gap in the country. During the same period, the export to GDP ratio has declined from 13% to 10% whereas the import to GDP ratio has increased from 15% to 19%.

This rising imbalance in the trade account has been significantly corrected by a remarkable growth in remittances, which have grown by nearly 25% during this period, with the result that our current account has been stable in recent years. Not surprisingly, the terms of trade for the country during this period have also continuously worsened, eroding competitiveness of our exports. This is not a satisfactory state of affairs. Our trade balance, largely due to lacklustre growth in exports, is not consistent with our economic potential.

There is no escape from facing the challenge of stemming the declining trend in country’s export to GDP ratio by giving a big push to the exports and redirecting our energies for enabling our industry and agriculture to create an exportable surplus in the country. To this end, this budget will be laying the basic foundations for a major thrust on export promotion. I will announce a number of initiatives aimed at giving boost to our potential exports.

(6) Creating New Jobs: We need to create jobs to absorb the rising number of young men and women entering the job market. As I said previously, much of this activity has to take place in the private sector, as our primary job is to provide an enabling environment for the private sector to undertake investments. The 3G-4G technologies, successfully introduced by our government, will spur growth not only in rolling out this facility but enabling other users to improve productivity and efficiency in their operations.

A detailed study on the impact of 3G-4G technology on employment has estimated some 900,000 jobs will be created in the next four years. Investments are encouraged through other policies, most notably by reducing government borrowings and making more credit available for private investments. On our part, a major increase in development spending is planned during the year. PSDP will be increased from Rs.425 billion during 2013-14 to Rs.525 next year, an increase of nearly 24%. As I will enumerate shortly, these funds will be invested in major projects of infrastructure that will not only create immediate jobs but will go a long way in promoting more investments in the private sector.

(7) Raising Investment for Growth: Investment remains a challenge for the economy. The plans we have in this regard are at an advanced stage of preparation and work on some mega projects is just starting. Even the phenomenal increase in the flow of credit to private sector, which I noted earlier, has not been fully reflected in investment figures projected on the basis of data for 9 months.

There would be a significant acceleration in investment in the country in months and years ahead. For the first time in recent history of the country we are investing the fullest available development outlay of Rs.425 billion. This is a remarkable achievement in view of the fact that we have made a fiscal adjustment of 2.4% during the year. Frequently, in the past, whenever such adjustment was made it was essentially made by cutting development spending.

We have broken this tradition. Those who have constantly criticized the government for slow development spending did not realize that the new government needed time to reset priorities in the development plan to ensure that such projects are undertaken that are consistent with the economic program of the government that enabled it to win the confidence of the people. We have done this and with that the pace of development spending has accelerated.

(8) Public Debt Management: The composition of public debt has witnessed major changes in past few years with increased reliance on short-term domestic debt owing to lower external debt inflows, which entails high rollover and refinancing risk. Besides, the effective cost and stock of external public debt increased due to rapid depreciation of Pak Rupee in the recent past. The present government has taken immediate corrective measures to manage its public debt portfolio effectively. Key elements of our debt management policy are:

– A Medium Term Debt Management Strategy (2014-18) has been developed to lengthen the maturity profile and reduce the refinancing risk along with sufficient provision of external inflows to relieve the pressure on domestic resources and to enable private sector to access more credit from the banking system;

– To broaden the investors’ base and have a liquid government securities market, trading of Treasury Bills commenced on the stock exchanges. This has provided an additional investment channel to retail investors.

– Pakistan successfully tapped international capital markets after a gap of 7 years, which highlights investors’ confidence on country’s leading economic indicators, external finances and structural reforms undertaken by the present government.

– The program loans received from multilateral/bilateral development partners during 2013-14 as well as financing raised from international capital market in the form of Euro Bond will not only assist in lengthening of maturity profile of public debt, there are also strong concessional element associated with these loans i.e. low cost and longer tenors. The annual cost saving on these loans, as mentioned earlier, is around Rs.24 billion as compared with the domestic financing.

(9) Protecting the Poor: Reaching out to the poor is a major policy objective of our government. The main intervention we have designed for this purpose is the National Income Support Program (NISP) which consists of Prime Minister’s Youth Program and Benazir Income Support Program. Of this BISP remains the biggest effort to help the poor through cash transfers. The following achievements have been made in this regard:-

i. In 2008, I was the one who made an allocation of Rs.34 billion for BISP. However, when we inherited this program last year, only Rs.40 billion were spent. Given our commitment to the welfare of the poor, we immediately raised the funding to Rs.75 billion, while adding an important component for schemes under the PM’s Youth Progamme. We are further enhancing this allocation to Rs.118 billion, representing approximately200% increase since 2012-13;

ii. Until 2012-13, the cash-transfer program was reaching out to 4.1 million families, which will have taken to 4.8 million during the current year. Next year we will be increasing the number of beneficiary families to 5.3 million, showing an increase of 29% since 2012-13;

iii. The monthly stipend under the program was initially set at Rs.1000, which continued for five year, until we enhanced by 20% last year to Rs.1200. This year we announce another increase of 25% by raising the monthly stipend to Rs.1500. Therefore, in the last two years, we have raised the monthly stipend by 50%

iv. Besides the above, an allocation of Rs.21 billion has been provided to fund the special schemes under the Prime Minister’s youth program announced previously, most of which are now fully functional and those that will be announced in this budget.

v. We are proud of this support that we are providing to our vulnerable and young people. We owe it to them; it is their own resources that we are managing in trust and making sure that in their state of vulnerability we are there to help them. I would also like to emphasize that we are not promoting a culture of dependency for the poor.

We have adopted a methodology that constantly watches the economic state of recipients and there is a very structured process through which families are graduated from being recipients to become economically independent. This program is therefore a program only to help families under need and encourage them to gain a life that does not finally depend on such assistance.

(10) Strengthening Social Safety-net Programs: A large number of social safety-net programs are scattered across different ministries and departments and it is not evident if these programs are fully synergized with each other.

To strengthen these programs it has been decided to establish a high-powered Task Force to undertake a detailed review of the programs’ performance, assess their effectiveness, and to determine that these programs are optimally operated and no overlapping in their scope and work is present. Based on the report of the Task Force a new policy will be formulated that would allow more coordinated delivery of social safety-net services by the government.

(11) Development and Promotion of ICT Sector:- The Government is fully cognizant of the importance of Information and Communication Technology and its potential role in trade, foreign direct investment, women empowerment, employment, education, national competitiveness and ultimately the economic growth. We are making adequate provisions in this budget for the development and promotion of the this vital sector, namely:

• Establishment of Universal e-Telecentres: In order to improve public access to ICT services such as NADRA facilities, biometric verification devices for issuance of SIMs, e-facilitation in health, agriculture, commerce, governance, learning etc. and to generate local employment and entrepreneurial opportunities, Universal Services Fund (USF) shall fund a mega program for establishment of Universal e-Telecentres.

In the first phase, 500 Telecentres will be established in the four provinces and Islamabad. An investment of approximately Rs.12 billion shall be made on this program over the next three years.

• Improved Connectivity of Remote Areas: This year USF shall invest another Rs.2.8 billion in its ongoing program whereupon optic fibre cable is being aggressively laid to provide connectivity to outlying areas particularly in Baluchistan, FATA, rural KPK and other parts of country. Additionally, Rs.3.6 billion have been earmarked out of USF to be spent on Rural Telecommunications Program. All these efforts shall result into rapid rollout of next generation ICT services in the remote areas.

• Prime Minister’s ICT Scholarship Program: This Program aims at providing the highest quality ICT education opportunities at top universities to the students belonging to rural and semi urban areas. This year, Rs.125 million have been allocated out of National ICT R and D Fund to provide 500 scholarships in a transparent manner.

Medium-term macroeconomic framework

Mr. Speaker

9. As the in past, our budget strategy is embedded in a three year medium term macroeconomic framework, the main features of which are as follows:

(a) GDP growth to gradually rise to 7.1% by FY 2016-17.

(b) Inflation will be maintained in single digit throughout the medium term.

(c) Investment to GDP ratio will rise to 20% at the end of medium term.

(d) Fiscal deficit to be brought to down to 4% of GDP by 2015-16 and maintained at this level afterward.

(e) Tax to GDP ratio will be increased 13% by the year 2016-17

(f) Pakistan’s foreign exchange reserves will be increased to more than $22 billion at the end of 2016-17.

10. Encouraged by the performance in the first year in office, we are confident that these ambitious targets will be achieved with consistent and resolute determination to remain on-course on the path of reforms.

Development plan

Mr. Speaker

11. I would now present some highlights of the development budget, focusing mainly on the sectors that will contribute most to the economic development.

Water

12. One of the greatest assets bestowed on this nation by the Almighty (SWT) is the abundance of water resources. Pakistan has got one of the largest irrigation networks in the world. After initial big investments in the development of water resource we have stopped adding to our water storage capacity while the existing dams have accumulated silt over the years.

13. The most important sub-sector claiming resources in our development plan is the water sector, where we are investing Rs.42 billion for projects in various parts of the country. A project that will be the future life-line of Pakistan is the Diamir-Bhasha Dam, which will store4.7 MAF of water and generate electricity of 4500 MW.

We have provided Rs.10 billion for land acquisition during the year and have kept a provision of Rs.15billion for completion of the land acquisition process. We are committed to make this dam a reality and construction work will start soon on the site.

Water projects in Baluchistan are the second most important focus of water sector investments comprising construction of delay action dams, flood dispersal structures, canals and small storage dams. Major focus is on completing the long delayed projects such as Katchi Canal (Dera Bugti and Nasirabad), Naulong Storage Dam (Jhal Magsi),Extension of Pat Feeder Canal to Dera Bugti and Shadi Kaur Dam (Gawadar). In Sindh, the projects of Rainee Canal(Ghotki and Sukkur), extension of Right Bank Outfall Drain from Sehwan to sea will be undertaken.

In Punjab Ghabir Dam (Chakwal), and in AJK, completion of raising of Mangla Dam will be executed. In Khyber Pakhtunkhwa, Palal, Kundal and Sanam Dams (Khyber Pakhtunkhwa) and in FATA, Kurram Tangi Dam (North Waziristan), Gomal Zam Dam (South Waziristan) will be undertaken.

Besides, numerous schemes of lining of water-courses will be undertaken in Khyber Pakhtunkhwa, Sindh and Punjab to reduce water wastage together with flood protection and drainage schemes all over the country. Moreover, new water sector projects are being initiated which include a series of small dams across Baluchistan and Khyber Pakhtunkhwa including Basool Dam in Ormara and Makhi Frash Link Canal in Thar and Channelization of Nullah Deg in Punjab.

Power

Mr. Speaker

14. Another sub-sector that is getting our utmost attention is the power sector. Widespread power shortages have badly damaged our industrial sector and added to the sufferings of the common people. Prime Minister Nawaz Sharif has devoted personal attention to the process of reforms and investments in this sector.

We have taken a number of steps to address structural problems of the sector including reduction in system losses, improvement in recoveries, elimination of theft and settlement of inter corporate circular debt. However, our real focus is on developing additional resources of energy so as to permanently overcome the problem of shortages. Therefore, in keeping with last year’s practice we have allocated the largest amount of resources to create more economical capacity in the country.

During the current year a sum of Rs.205 billion will be invested in this sector. The projects included in the program include Neelum-Jehlum Hydro Power Project (969 MW), Diamir-Bhasha Dam and Hydropower Project (4500 MW), Tarbela Fourth Extension Project (1410 MW),Thar Coal Gasification Project (100 MW), Chashma Civil Nuclear Power project (600 MW), Two Karachi Nuclear Coastal Power Projects (2200 MW) with Chinese assistance, Keyal Khawar Hydro Power Project (122 MW), AllaiKhawar Hydro Power Project (122 MW), Combined Cycle Power Projects at Nandipur(425 MW) and Chichoki Malian (525MW), Refurbishment and Up-gradation of Generation Units of Mangla Power Station, Up-gradation of Guddu Power Project (747 MW gas-based), conversion of oil based power projects to coal at Muzaffargarh and Jamshoro (3,120 MW), transmission network to evacuate power from Wind Power Projects in Jhimpir and Gharo, interconnection of Chashma Nuclear III and IV, interconnection of Thar Coal based Engro (1200 MW) and massive allocations to improve the transmission lines, grid-stations and distribution systems. We have expended unusual efforts to make the dream of Dasu Hydropower Project a reality.

The World Bank will soon be approving $700million for financing this critical project that will add more than 4500 MW of power after completion. We are designing innovative ways to mobilize the requisite finances for constructing this project within the shortest possible time.

15. Addition of a number of hydel projects, coal based plants, wind energy and nuclear projects will correct the energy mix to provide cheap electricity to the people of Pakistan while improvement of the transmission and distribution system will reduce the system losses. The drive against energy theft will further reduce the burden on the common man.

Highways

Mr. Speaker

16. Pakistan has significant importance in regional connectivity. It provides crucial North to South and East to West corridors to three regions and some of the fast-growing economies in the world. But in order to benefit from this natural advantage, Pakistan needs to develop state of the art rail, road and energy infrastructure.

17. Leaders have to see through the future. Prime Minister Nawaz Sharif recognized in 1990 that Pakistan will not progress rapidly unless it develops an extensive network of motorways to link distant parts of the country.

Therefore, he launched his vision of a modern communication system, which could not be materialized due to negligence of a number of intervening governments. But we are picking up the pieces from where we left off and we intend to complete most of the North to South Corridor projects during the next four years.

Broadening his vision of connectivity the Prime Minister along with his Chinese counterpart has developed the vision of Pak-China Economic Corridor that would link Kashgar and Gawadar through both motorways and railways. It is not difficult to imagine the phenomenal economic development that would be engendered by such an epoch-making project. Various components of the project have been undertaken starting this year.

18. The premier project that would transform the south-north corridor, linking Sindh to Up-country through a rapid transit mode, is the 959 KM Karachi-Lahore motorway project for which Rs.25 billion have been allocated for land acquisition this year and Rs.30 billion in the next year’s development budget. This will enable complete land acquisition for the project.

Construction work on 276 KM Lahore to Khanewal Section, 387 KM Multan to Sukkur Section, 296 KM Sukkur to Hyderabad Section and 136 KM Hyderabad to Karachi Section will start soon and will be undertaken on public-private partnership basis. It is estimated that the project will be completed before the term of the present government expires.

On the other hand, work on the remaining portions of 892 KM Gawadar-Ratodero Motorway has been expedited and the works on 200 KM long Gawadar-Turbat-Hoshab Section have been prioritized by meeting all its financial requirements. For northern connectivity, work on for construction of 460 KM Raikot-Havelian-Islamabad Section of the corridor will also be starting as well as for widening of the Khunjrab-Raikot Section of the Karakorum Highway.

19. There are many more highway projects included in the development plan. This include184 Km Faisalabad-Khanewal Section and 57 KM Khanewal-Multan Section of M4. In addition, allocations have also been made for a number of crucial bridges and tunnels to open up unconnected areas. These include accelerated completion of Lowari-Tunnel, Lipa Tunnel in Lipa Valley, a bridge on River Chenab near Sultan Bahoo, Baba Farid Bridge near Pakpattan, Syedwala Bridge on River Ravi near Nankana Sahib, and a bridge on Indus River to connect N5 and N55.

20. In order to address the problem of urban congestion, allocations have been made in the current budget for the Peshawar Northern-Bypass, Karachi Northern Bypass, Lyari Expressway, Dualization of Sukkur Bypass, and Lahore Eastern Bypass. Moreover Ratodero, Dadu-Sehwan Road and RakhiGaj-Bewala East-West road are also being constructed to improve connectivity.

21. This is an extensive program in the highways sector comprising 74 projects of motorways, highways, bridges, tunnels, and regional roads and a sum of about Rs.113 billion has been kept in the budget for this purpose. Numerous job opportunities will be created while undertaking the above projects.

Mr. Speaker

Railways

22. Railways is supposed to provide cheaper, faster and convenient mode of passenger and freight transport. But despite inheriting a large railway network spread across Pakistan, we have mismanaged the railway assets to the extent that nobody would chose to use it as a first option.

Railway was headed for near extinction when PML N took over last year. Marginalization of Railways was simply unacceptable to us because the world over, rail transport is regaining its lost glory as more investments are made and faster trains are built for both passenger and goods transport.

23. In the budget for 2014-15, Government has allocated amounts for doubling of track from Khanewal to Lalamusa, covering a major portion of the north-south mainline. Remaining tracks will also be doubled in coming years.

24. Similarly allocations have been made for rehabilitation of track from Karachi to Khanpur and Khanpur to Lodhran. Allocations have also been made to strengthen and rehabilitate 159 weak railway bridges. These measures will improve the speed and reduce travel time.

25. Modern railways depend heavily on technology that increases efficiency and reduces accidents. However we have not upgraded our system to benefit from technological advancements. In the budget for the current year the Government has allocated significant amounts for mechanization of track maintenance, replacement and improvement of signalling system and provision of a centralized traffic control system.

26. Pakistan Railways was in severe shortage of engines and bogeys when PMLN took its charge. We have given special attention to these shortages and huge investments in locomotives and rolling stock have been made in the current as well as next year’s budget. Allocations have been made in the current budget to add more than 500 engines to the system through procurement and repair. This will address the issue of shortage of engines.

27. Similarly around 1500 new wagons/bogeys are also being arranged. Pakistan Railways is taking these steps to improve the travelling experience of its customers. In order to further enhance the convenience of travelling with Pakistan Railways, this budget has allocated special amounts to renovate and upgrade railway stations in various cities.

28. In order to make Pakistan Railways profitable, the Government has planned to offer increased freight services. Allocations have been made in this budget to procure additional wagons for freight operations and a feasibility study is being commissioned to study the possibility of a dedicated freight corridor.

29. All these steps have been taken to revive the existing services of Pakistan Railways. In addition to the revival of the existing system, the Prime Minister of Pakistan has a vision for high tech, modern and viable railways. Therefore, some entirely new and bold steps are being taken to take Pakistan Railways to new heights. Huge investments are being made under the China Pakistan Economic Corridor, which will bring fast, modern and reliable railways to Pakistan.

30. Similarly urban railway is being introduced initially in Karachi and Lahore. Allocations have been made in the Federal budget to revive the Karachi Circular Railway while the Government of Punjab has planned to introduce a modern metro rail in Lahore. This is a new beginning and Insha’Allah the people will feel the difference in service delivery of Pakistan Railways in the coming years.

31. A path-breaking project of Islamabad-Murree-Muzzaffarabad Rail Link is being initiated and a new company with the name of Kashmir Railways is being established to construct and manage this exceptional project in the scenic area of Galyat and Kashmir. This project will open new avenues in tourism and travel pleasure and this would prove to be a special gift of Pakistan Muslim League to the nation.

32. In this budget, we have allocated Rs.77 billion for 45 development schemes and pay and pensions of railway employees. Private and international investments are expected during the course of the financial year in this sector, as well.

Human Development

Mr. Speaker

33. People are the most precious resources of any nation. Therefore we consider the expenditures on human development as investments as they lay the foundation of future growth at an accelerated pace.

34. Initiatives that will be undertaken for the promotion of this sector are as follows:

(a) A sizeable allocation of Rs.20 billion has been made for 188 projects of the Higher Education Commission, which will support development plans of different universities all over the country. It may be noted that on the current side also a hefty allocation of Rs.43 billion is made for HEC. Thus a combined outlay of Rs.63billion will be made for higher education. The combined allocation represents about 10%increase, which is sizeable considering the tight fiscal conditions prevailing in the country.

(b) Health sector service delivery has been fully devolved to the provincial governments. But the Federal Government is cognizant of its responsibilities to support the provinces in eradication of deadly diseases, regulation of the health sector and coordination to achieve the Millennium Development Goals (MDGs).

Therefore the current budget allocates Rs.26.8 billion for the health sector programs. Our major focus will be polio eradication. An emergency plan has been made for this purpose and the Federal Government will work closely with the provincial jurisdictions to eradicate polio from Pakistan.

(c) Additionally the budget will also fund the Expanded Program of Immunization (EPI), National Maternal Neonatal and Child Health Program, National Program for Family Planning and Primary Healthcare and several national programs for prevention and control of important diseases such as blindness, TB, Hepatitis and AVN Influenza.

(d) Most importantly, funding for the provincial programs for population welfare has been kept at Rs.8.2 billion.

SPECIAL INITIATIVES

Mr. Speaker

35. Having stabilized the economy and announced a significant acceleration of investment program in the public sector let me turn to some special initiatives our government is announcing in order to meet the special needs of exports, in general, and textiles, in particular, commerce and industry, agriculture and housing. These sectors are central to economic development and there recent dormant performance has been a cause of concern. Accordingly, we have decided to give impetus to development in these sectors.

Exports Promotion

36. I had earlier highlighted the weaknesses in our exports performance that have emerged over the last decade. We must arrest this low exports growth and declining export to GDP ratio. The following measures are being adopted for promotion of exports:

(a) Setting up of EXIM Bank of Pakistan (Specialized DFI): The Government has decided to set up the Export-Import (EXIM) Bank of Pakistan to enhance export credit and reduce cost of borrowing for exporting sectors on long term basis and help reduce their risks through export credit guarantees and insurance facilities. The bank will provide liquidity to exporters. Its authorized capital will be Rs.100 billion while the initial Paid up Capital will be Rs 10 billion. Legal framework for the establishment of the Bank will be developed through an Act of Parliament.

(b) Exports Refinance Facility (ERF): The Government, through the State Bank of Pakistan, has arranged to reduce its mark-up rate on exports finance from 9.4% to 7.5%, which will bring it in line with such rate prevailing in the countries competing with Pakistan which will reduce the financial cost of exporters by 2%;

(c) Long Term Finance Facility: The Government, through the State Bank of Pakistan has arranged to reduce its mark-up rate on long term financing facility for 3-10 years duration from around 11.4% to 9%w.e.f 1st July 2014 which will reduce financial cost of exporters by 2.4%;

(d) Removing Anti-exports bias in Imports: A tariff rationalization program, being announced in the present budget, will gradually remove the anti-export bias in country’s tariff policy and make exports more competitive.

(e) Revitalizing Export Development Fund (EDF): The EDF was established through the contributions of the exporters for the promotion of exports. However, over the years projects undertaken with Fund’s resources were not entirely helpful to exports. The EDF Board has been reconstituted and its organization is overhauled with a view to make it more responsive and effective for the benefit of exporters.

(f) Establishment of Pakistan Land Port Authority: It has also been decided to establish Pakistan Land Port Authority to transform land ports into efficient facilitators of trade while being responsive to risks such as security issues, smuggling and human trafficking. This measure will help Pakistan to increase its exports through the overland route where numerous opportunities are offered by regional countries and connectivity to northern and western corridors;

Textiles Package

37. Textiles sector is the mainstay of country’s exports as it accounts for more than half of country’s exports. Its performance has been affected due to poor crops, delays in introduction of quality seeds and regulatory approvals for introduction of Bt cotton, widespread energy shortages, numerous local taxes and levies, high cost of finance and restricted trade regimes adopted by importing countries.

38. A meaningful export promotion policy will not be possible unless we provide the much-needed support for the development of this sector. Accordingly, the following package of support and incentives is provided for the textile sector:

(a) Draw-back for local taxes and levies to be given to exporters of textile products on FOB values of their enhanced exports if increased beyond 10% (over last year’s exports) at the following rates:

o Garments 4%

o Made ups 2%; and

o Processed fabric 1%

(b) Mark up rate for Export Refinance Scheme of State Bank of Pakistan is being reduced from 9.4% to 7.5% from 1st of July 2014.

(c) The Expeditious Refund System is being improved and a fast track channel for manufacturers-cum-exporters is being created. I have already directed FBR to dispose of all their pending Sales Tax refund claims before 30th September 2014. In future, all admissible refund claims of exporters shall be disposed off within 3 months, if not earlier.

(d) The textile sector value chain will be given protection as per the study carried out by National Tariff Commission (NTC). This will provide a predictable tariff regime for the foreseeable future.

(e) Textile industry units in the value added sector would be provided Long Term Financing Facility (LTFF) for up gradation of technology from State Bank of Pakistan at the rate of 9% for 3-10 years duration.

(f) Textile sector enjoyed duty free import of machinery under textile policy 2009-14. This facility will end on 30th June 2014 (SRO-809). It is proposed that in view of the need to take full advantage of GSP plus facility, this concession would be allowed for another two years.

(g) Use of Bt Cotton will be promoted by expediting regulatory approvals. To enable availability of quality seeds requisite amendments in Seed Act 1976 will be made and Plant Breeders’ Right Act will be promulgate.

(h) A new vocation training program will be launched to train 120,000 men and women, over the five year period, for skills required in the textile sector, especially in the value added sector such as garments and made ups. The scheme will have following features;

• Total Cost: Rs 4.4 billion

• Monthly stipend of Rs.8,000 per month

• 3 months training program

• To be run through TEVTA institutes and textile industry

Agriculture

39. Agriculture occupies a central position in country’s economy as besides contributing more than 21% to GDP it houses more than 65% of population and employs nearly 45% of our labour force. It has also great export potential but little has been done to this end, except a few token efforts to provide some support for transport of agriculture produce.

The key to improving agriculture productivity is access to seeds, water, credit, research and extension serves, markets and better pricing. Many of these responsibilities have been devolved to provinces and we are urging provinces to play their role in this regard. However, the federal government remains actively engaged with provinces in developing policies required for maintaining national food security and undertaking research in basic agriculture activities.

With a view to develop a national policy for the long-term sustainability of agriculture on profitable basis it has been decided to establish a National Food Security Council. The council will be responsible for ensuring policy coordination across provinces and relating to productivity improvements, market reforms, value addition and prices that ensure stable incomes for farmers.

40. Within the areas where Federal Government can help the following package of incentives and support are being announced for the agriculture sector:

(a) Credit Guarantee Scheme for Small and Marginalized Farmers: The government is introducing Credit Guarantee Scheme in order to encourage banks for financing to unbanked small farmers. Government, through the State Bank of Pakistan, will provide guarantee to commercial, specialized and micro finance banks for up to 50% loss sharing. The scheme will cover farmers having up to 5 acres irrigated and 10 acres non-irrigated land holdings. It will benefit 300,000 farmer households/families with a loan size up to Rs.100,000. Total disbursement under this scheme will be Rs.30 billion.

(b) Reimbursement of Crop Loan Insurance Scheme (CLIS) Premium: Farming is one of the most vulnerable occupations in the face of natural calamities, climatic changes and plant diseases. In order to cover the risk to various crops the Government has introduced the crop loan insurance scheme for farmers with landholdings of 12.5 acres.

From this budget, the scope of CLIS premium reimbursement is being enhanced up to 25 acres. All farmers obtaining loans for production of 5 major crops are eligible to benefit from this scheme. 700,000 farmers households/families will benefit from this scheme. Total budget cost of the scheme is Rs.2.5 billion.

(c) Livestock Insurance Scheme: Pakistan is a major livestock and milk producer. But the majority livestock ownership is at subsistence level which increases the risk of loss. In order to mitigate the risk of losses of small livestock farmers, the Government is introducing the Livestock Insurance Scheme for all farmers getting financing for up to 10 cattle. The scheme will cover livestock insurance in case of calamity and disease. The scheme will benefit 100,000 Livestock farmer households/families. An allocation of Rs.300 million has been made in the current budget for the scheme.

(d) Reduction in Sales Taxes on Tractors: The previous government levied sales tax on tractors which w.e.f. 1st January 2014 stands enhanced to 16%. This has adversely affected local buying of tractors. To encourage use of tractors by the growers it is proposed that the sales tax will continue to be charged at the reduced rate of 10%.

(e) Establishment of Commodity Warehouses/Receipt Financing Mechanism: In order to develop a mechanism for establishment of quality warehouses, silos, cold storages and cold chains, and linking it to finance through warehouse receipt system, the Government, through the State Bank of Pakistan, is helping to develop a regulatory mechanism for establishment of a warehousing clearing system and introducing special incentives for potential investors.

This scheme will cover all existing or new warehouses, silos and cold storage for farmers, aggregators, traders and other value chain players. Under the scheme, Rs.1 billion will be invested as GOP-equity for establishment of a PPP-company to regulate and monitor this system. Additionally, State Bank has decided to provide LTF facility for establishment of storage and cold-chain facilities.

(f) Agriculture Credit: Credit to agriculture is critical for enhancing famers’ productivity. We are conscious of the difficulties faced by the farmers in getting credit through the loan sharks. During the year, our Government has increased credit availability to agriculture sector from a targeted Rs.315 billion to Rs.380 billion. The State Bank has now decided to enhance overall credit to Rs.500 billion for the year 2014-15. With increased credit availability, and various insurance schemes, farmers’ problems with respect to access to financial sector will be addressed to a large extent.

(g) Incentives for Processing Industries of Special Areas: In some parts of the country, such as in Makran Division, Gilgit-Baltistan, Swat District and FATA regions, agriculture produce suffers great losses for lack of processing and transport facilities.

To encourage establishment of processing units at such places, Government is introducing a policy to support processing projects in Makran, Gilgit-Baltistan, Swat Valley and FATA. These units will enjoy duty and tax-free import of machinery not locally manufactured and will also have access to SBP LTF facility and 5 years tax holiday. Additionally, a concessionary long-term financing facility shall be provided to them through State Bank of Pakistan.

(h) Airfreight Subsidy: Government has also decided to provide 50% airfreight subsidy for horticulture produce from Gilgit-Baltistan.

Housing

41. Housing is a basic need of the human beings and the government owes it to its people to facilitate provision of housing in the country. The following initiatives are being planned to promote housing sector in the country:

(a) Low Cost Housing Guarantee Scheme: The government has specially designed a program to provide housing credit to low cost housing units to enable the poor to have their own houses. Banks will provide loans of up to Rs.1 million and financial institutions, under this scheme while the government will guarantee 40% of the portfolio amount. The scheme will cover all areas of Pakistan and 25,000 loans worth Rs.20 billion will be provided through this innovative method of supporting low and middle-income families.

(b) Mortgage Refinance Company: A Mortgage Refinance Company is being established with a broad shareholding of the Government of Pakistan, Commercial Bank, Development Finance Institutions, Multilaterals and others for this purpose, to generate long-term liquidity for housing finance. Total paid up capital of the company would be Rs.6 billion. The company will provide refinance facilities through purchases of loans from the financial institutions engaged in loan origination and packaging them for sale to long-term investors. Government of Pakistan will invest Rs.1.2 billion in the equity of the company.

(c) Revival and Restructuring of HBFC: House Building Finance Company Limited has been the premier for providing housing finance to low and middle-income families. There is an urgent need to rehabilitate this institution to enable it to play its important role in the housing sector. The following actions will be taken for this purpose:

Immediate formation of Board of Directors;

Improvements in efficiency and capacity;

Simplification of procedures;

Major drive to recover non-performing loans.

Provision of new resources;

(d) PM Low Cost Housing Scheme: In addition to above, a provision of Rs.6 billion has been kept in the budget for PM’s low income housing scheme.

42. Prime Minister’s Health Insurance Scheme: At present, only a quarter of population in Pakistan is covered for health care costs, whereas 74% of Pakistanis, mostly poor and from rural areas, have to pay for such expenditures out of their own pockets.

Urgent corrective measures warranted to rectify this situation. Accordingly, with the involvement of provincial governments an insurance scheme is being designed that will help the poorest segments of population obtain health insurance for tertiary care and special diseases, if the provincial governments provide the coverage for the primary and secondary care. A provision of Rs.1 billion is being kept in the budget for launching of this scheme on pilot basis, which will be rapidly replicated in increasingly larger number of districts.

Pakistan Development Fund

Mr. Speaker,

43. In the past, an effort was made to establish the forum of Friends of Democratic Pakistan (FODP), which did not produce any tangible results. With the grace of Allah, we have established a company titled Pakistan Development Fund Limited, for which resources of Rs.157 billion have been arranged. The Company will provide financing to key infrastructure projects and promote Public-Private Partnerships (PPPs) for this purpose.

Islamic Banking

Mr. Speaker

44. We have revived the efforts to promote Islamic banking and financial system in the country. A Committee has been constituted for this purpose comprising prominent Ulema, bankers, economists and government officials, which will finalize its recommendations by 31st December, 2014 suggesting measures to enhance the current share of Islamic banks in the overall banking assets, remove difficulties in expanding the outreach of Islamic banking, enlarge the set of Islamic financial products, design instruments for financing government fiscal operations on Shariah principles and identify steps required to ensure wider application of Islamic financial system in the country. A Centre of Excellence in Islamic Economics is also being established to further the research work in Islamic Banking and Finance.

Budget Estimates

Mr. Speaker,

45. Now I turn towards the estimates of revenues and expenditures for the next fiscal year.

46. Gross revenue receipts of the federal government for 2014-15 are estimated at Rs.3,945billion compared to the revised figures of Rs.3,597 billion for 2013-14, showing an increase of 10%. We have set an ambitious target for tax collections, as without collecting more taxes we cannot hope to increase development spending that is crucial for economic growth. I shall share more details of this in Part-II of my speech.

47. The share of provincial governments out of these taxes will be Rs.1,720 billion as compared to Rs.1,413 billion revised estimates for 2013-14, showing an increase of about 22%. Net resources left with the federal government will be Rs.2,225billion compared to the revised estimates of Rs.2184 billion for last year.

Federal Government recognizes that the provincial governments have increased responsibilities of social sector service delivery under the new arrangements. Therefore, we have raised the level of provincial transfers over the last year from Rs.1,215 billion to Rs.1,720 billion, which is an increase of 42%, in order to enable them to improve the social services and law and order for the people of Pakistan.

48. Total expenditure for 2014-15, is budgeted at Rs.3,937billion compared to the revised estimates of Rs.3,844 billion for 2013-14, showing meagre increase of 2% which is much lower than the inflation rate. The budgetary needs of our Armed Forces as per their needs have been duly provided in the budget. Viewed within the overall increase, the government expenditure in real terms is actually contracting instead of expanding.

This approach of gradually increasing the revenues and reducing the expenditure will make us self-reliant and sustainable. The current budget is estimated at Rs.3,130billion for 2014-15 against a revised estimate of Rs.2,935billion for 2013-14, showing an increase of 6.6%. However, the development budget has been adequately funded in order to meet the investment requirements of a growing economy. Against a revised estimate of Rs.425 billion for PSDP, we have budgeted it at Rs.525 billion showing an increase of nearly 24%.

Budget deficit is considered as the main culprit behind economic instability as it leads to both inflation and exposes the country to external vulnerabilities. As I noted earlier, we are making significant progress in reducing deficit, as it was brought down to 5.8% from 8.2% last year. This year we are reducing it to 4.9%. The federal deficit is projected at Rs.1,711billion for 2014-15 compared to the revised estimate of Rs.1,660 billion for last year. By requiring surplus of Rs.289 billion from the provinces, compared to a revised deficit of Rs.183 billion last year, we have projected an overall fiscal deficit of Rs.1422 billion for 2014-15.

49. Mr. Speaker

50. This shows a gradual trend of reducing fiscal deficit marking responsible behaviour of the government towards fiscal and economic stability. We will continue this practice and further reduce the deficit to just 4% in the coming years. This will further stabilize the economy.

Mr. Speaker,

51. Allow me to begin Part II of my speech, which relates to taxation proposals.

52. Our government had inherited perhaps the worst possible tax collection performance during the fiscal year 2013-14. Against a budget target of Rs.2381, we were given the revised collection figure of Rs.2050 billion, which meant a massive reduction of Rs.331 billion from the budget estimate. However, what was most shocking is the final collection of only Rs.1946 billion, another shortfall of Rs.104 billion from the revised target. This amounted to a meagre growth of 3% over tax collections during 2011-12, the lowest ever nominal growth.

53. We have started picking pieces from such dismal performance and, as I noted earlier, our tax collections are up by 16.4%. While this is quite respectable under the circumstances of an economy going through a stabilization phase, we need to exert a great deal more efforts in pushing the tax revenues of the country which are commensurate with both our development ambitions and needs of fiscal sustainability.

Principles of Taxation Proposals

54. At the outset, I would like to lay before the House the basic principles and objectives guiding the taxation proposals included in the Budget 2014-15. These are as follows:

a. The share of direct taxes in overall taxes shall be increased;

b. The incidence of tax measures will be on those outside the tax net and those already in the net will be protected;

c. The non-compliant taxpayers will have to bear a cost of noncompliance, which will raise their cost of doing business;

d. The tax regime will be simplified and inequities created by SRO based concessions and distortionary provisions will be removed through a phased plan.

e. The tax revenues will be increased so as to improve the Tax to GDP ratio.

f. Without compromising the basic character of simplified and distortion-free tax regime, appropriate incentives will be provided for facilitating foreign investment in the country, development of less developed areas, agriculture sector etc.

55. These are very sound principles of taxation that have guided our proposals. Let me turn to specific proposals.

Phased Elimination of SROs

56. Because of a large and complex regime of concessionary SROs, developed gradually over many years, a convoluted and multi-layered structure of duties and taxes has emerged that continues to bedevil the taxpayers and creates inequities in the system. These SROs not only cause huge loss to national revenue but also, more crucially, distort the level playing field and breed corruption.

57. Over the last many years, a number of SROs were issued at the behest of interest groups having the power and influence to manage changes in the tax structure for their benefits. These exemptions serve as entry barrier for SMEs, give preferential treatment to big stakeholders, and have created factually a licensing regime that grants approvals and sanction quotas.

Mr. Speaker,

58. A high-powered committee approved by the Prime Minister Muhammad Nawaz Sharif diligently reviewed and extensively deliberated on the entire concessionary regime on the basis of principles developed after broad-based consultations. The committee, which included representatives of trade and industry recommended phasing out of the concessions over a period of three years, which the Honourable Prime Minister has approved.

Mr. Speaker,

59. This is a momentous occasion in the history of the tax reforms in this country because privileges granted to influential classes over the years are being abolished. We are taking a giant step towards evolving a simple, transparent and an equitable tax structure. Now those small and medium entrepreneurs, who do not have the financial resources and capacity to go through the complex and cumbersome procedures for obtaining concessions, shall have access to level playing field. A major source of discretion and malpractices is being done away with.

Mr. Speaker,

60.The thrust of our government is to promote growth and equity in the economy. Our proposed tax measures are another step in this direction. We believe that the engine of growth has to be the private entrepreneurship and all measures are being taken to promote it across the board i.e. from SMEs to the large industrial undertakings.

The tax regime would help promote the growth paradigm. We do not want to stymie growth. Accordingly our proposals will not put any additional burden on economic activity. We shall only tax the income and expenditure of the affluent class.

Our vision is to make Pakistan self reliant by generating our own resources. Our aim is to increase the tax-to GDP ratio, reduce budget deficit gradually and thereby divert more resources for development, which would engender growth and bring its benefits to the public.

Mr. Speaker

61. Our government does not believe in arbitrary and one-sided decision making. In conformity with our philosophy we undertook an extensive and intensive consultative process before formulating our tax proposals.

Economic Advisory Council, FPCCI, Chambers of Commerce and Industry, representatives of all major trade bodies, Anjuman-e-Tajiran, chambers of commerce and industry, professional organizations and economists were invited to give their proposals and suggestions for the current budget and their recommendation were duly considered and incorporated so far as possible in the proposed measures.

Relief Measures

Mr. Speaker

62. I will now highlight some of the relief measures to be introduced through Budget 2014-15:

a. Relief for Capital Market: A star performer of Pakistani economy during the FY 2013-14 has been the stock market. The rate of capital gains tax was to increase from 10% to 17.5% with effect from 1st July 2014. However, to ensure continued stability in the stock market, it is proposed that with effect from 1st July 2014 CGT rates shall be 12.5% for securities held up to 12 months and 10% for securities held for a period which is between 12 to 24 months, whereas the securities held for more than 24 months shall be exempt from CGT.

b. Investment Incentives for Foreign Direct Investment: To achieve the vision of an industrialized Pakistan in the foreseeable future we want to attract both domestic and foreign investment into the manufacturing sector.

This august House would recall that the Prime Minister had earlier announced a special package for promoting investment in the manufacturing, construction, housing and mining sectors for the domestic investors.

In order to attract Foreign Direct Investment in manufacturing, construction and housing sectors, it is proposed that corporate tax rate be reduced to 20% if the investment is in a new industrial undertaking or a construction or housing project to be set up by 30th June 2017 and at least 50% of the total project cost in the form of equity through FDI. This will also generate employment, which is one of our major challenges.

c. Incentive for Joint Ventures between Companies and AOPs: The non-resident companies investing in Pakistan had to create a joint venture with a local company and the contract receipts of such joint ventures were taxed as final tax in the hands of the joint venture/AOP and thus the non-resident companies could not enjoy their status of being a non-resident.

To facilitate such arrangements for the non-residents, it is proposed that if one member of the joint venture is a company, it should be taxed separately at the applicable rate while the individuals should be taxed as an AOP separately.

d. Incentives for Agriculture: To promote agricultural sector we are proposing concessions for encouraging tunnel farming by removing customs duty on import of plastic coverings and mulch film, anti-insect net and shade net. Sales tax on high irrigation equipment and equipment for green house farming is also proposed to be exempted.

e. Reduction in the Corporate Tax Rate: Business community has been agitating that corporate tax rates are quite high and act as deterrent to the promotion of corporatization. In accordance with the already announced policy it is being proposed to reduce the corporate tax rate by one percent. Therefore, for tax year 2015, the corporate tax rate shall be 33%.

f. Reduction in the Withholding Tax on Marriages and Functions: Last year the adjustable advance withholding tax @ 10% was introduced on persons arranging marriage and other functions for the purpose of documenting expenses made by persons out of the tax net. At present, the rate of advance income tax on functions and gatherings is 10%. Marriage functions at shadi halls are becoming the norm. Therefore the 10% rate is creating hardship even for the middle class. It is proposed to reduce the rate from 10% to 5%.

g. Relief for the Disabled Persons: The Government feels that the disabled persons need empathy and special consideration. It is being proposed to reduce tax liability of such persons having income up to Rs.1 million by 50%.

h. Reduction of Taxes on Telecommunication Sector: Telecommunication has become a necessity for all segments of society. Telecom Services are highly taxed as both FED and GST on Services continue to be imposed on them.

In order to simplify the tax regime, it has been decided to withdraw FED from those provinces which have imposed GST on Telecom Services. In areas where FED shall continue to be collected, the rate is proposed to be reduced from 19.5% to 18.5%. Furthermore, it has been decided to reduce the rate of Withholding Income Tax on telephone services from 15% to 14%.

i. Removal of Income Support Levy: Income Support Levy Act was promulgated through the Finance Act, 2013. The aim was to mobilize additional resources for the economically distressed persons. However, the public at large did not accept this measure as it was considered harsh and was perceived as double taxation. The Government has decided to accept the demand and it is proposed to repeal the Income Support Levy Act, 2013.

Income Tax

Mr. Speaker,

63. Now I come to our Income tax proposals to enhance revenue and resultantly increase tax-to-GDP ratio.

64 As I said earlier, our thrust is to focus on making the affluent classes contribute proportionately more to the exchequer and at the same time to make the non-compliant citizens to pay more tax than the compliant taxpayers. In the case of income tax the following proposals are presented:

a. Advance Tax on First and Business Class Airline Tickets: It is proposed that Airlines may collect advance tax @ 3% on the sale of first class and club/executive class air tickets if the passenger is a compliant taxpayer (i.e. those who filed their Income Tax returns for the preceding tax year), and 6% tax if the passenger is a non-compliant person. The passengers travelling through the economy class shall be exempt from this tax to ensure that working classes and students travelling to foreign destinations are not burdened by this measure.

b. Advance Tax on Purchase of Immovable Property: Real Estate sector is attracting a major chunk of investment in an attempt to make quick profits largely through speculative buying and selling. The investment in this sector, unless it leads to construction, is unproductive and needs to be channelized to more productive sectors.

To document and bring into tax net the real estate transactions it is proposed that an adjustable advance tax be collected on purchase of immovable property. The proposed rate of tax is 1% for complaint taxpayers and 2% for non-compliant persons.

However, properties with value less than Rs.2 million and schemes introduced by the government for expatriate Pakistanis will be excluded from this provision. Similarly, the rate of adjustable capital gains tax on sale of immovable property is proposed to be enhanced from 0.5% to 1% for the non-compliant persons.

c. Advance Tax on Electricity Bills over Rs.100,000 per month: To ensure due contribution from the rich and to discourage consumption, it is proposed to collect adjustable advance tax @ 7.5% on the monthly bill of Rs.100, 000 and above from the domestic electricity consumers.

d. Higher Advance Tax on Interest Income and Dividends: For the persons who are non-compliant, it is proposed that 5% additional adjustable advance tax be deducted from them on payment of dividend and interest.

However, they can claim adjustment of the additional tax paid if they file return. The additional tax on interest shall not be deducted in case of people earning income on interest up to Rs.500,000 in order to avoid hardship to low and middle-income earners.

e. Higher Advance Tax on Cash Withdrawal by Non-filers: Similarly, the non-compliant shall have to pay additional tax on cash withdrawals at 0.2%, additional tax on booking with manufacturers or registration of vehicles.

f. Higher Advance Tax on Car Registration by Non-filers: The non-compliant shall have to pay a higher rate of tax at the time of registration and payment of token tax on motorcars and SUVs.

g. Removal of Inequities: There are certain distortions and inequities in the tax system. The tax structure favours choice of one entity over another. In this regard, distortions and inequities in the mutual fund industry and other corporate entities are proposed to be removed.

h. Taxation of Accounting Income: In corporate cases, taxable income is usually far less than accounting income. The difference is the result of careful tax planning to avail all possible avenues of tax avoidance allowable technically. An alternate corporate tax @ 17% is proposed to be imposed on accounting income. The companies shall be taxed at ACT or corporate tax whichever is higher. Facility of carrying forward ACT up to 10 years and exclusion of exempt income is also proposed.

i. Removal of Tax Loopholes: Tax on certain classes of income was being avoided because of loopholes. Taxation of bonus shares by companies and bonus units of mutual funds and modarbas was different than that of dividend. This anomaly is now being corrected.

j. Tax Rates for Services: At present rate for deduction of tax on services are 6% and 7% for corporate and non-corporate taxpayers respectively. Considering that persons providing or rendering services usually enjoy high profit margins due to low costs, the existing rates are considered lower. Hence, to rationalize, it is proposed to enhance tax rate on services to 8% in corporate cases and 10% in other cases.

k. Changes in Final Tax Regime: Persons under final tax regime (FTR) file only statements without accounts. Actual income earned in such cases is not ascertainable. Moreover, FTR is liable to misuse as persons having other sources of income also file statements only. To enforce returns and accounts, it is proposed that existing rates of tax deduction or collection in certain cases such as commercial importers, resident and non-resident contractors, service providers, exporters, petrol pump operators and commission agents shall be applicable only in case returns are filed by them otherwise they shall be charged higher rate of tax.

l. Application of Tax on Foreign Institutional Investors: Currently, the foreign institutional investors neither file returns nor their tax is collected on capital gains. It is therefore proposed to bring FIIs under the withholding tax regime. This measure will broaden the tax net.

m. Mandatory Requirement of NTN: Further measure to broaden the tax net is a proposal to make obtaining of NTN a compulsory condition for seeking commercial/industrial electricity and gas connections. Sales Tax and Federal Excise

Mr. Speaker,

65. The government has made a conscious policy decision to enhance the contribution of direct taxes, which are progressive taxes, and gradually reduce the burden of indirect taxes, which affect the common man. Therefore, you will be pleased to know that no new tax has been imposed in case of sales tax and federal excise duty.

66. In case of sales tax and federal excise duty, since last budget for 201314, the government’s main objectives are to broaden the tax base and increase the cost of non-compliance for those who remain outside the tax net, to remove distortions and anomalies and to promote automation in order to reduce interaction between tax payer and tax collector. Some of the steps being taken in this regard through this budget are:

a. Simplified Sales Tax Regime for Retailers Tier-I: Because of a variety of reasons, most of the retailers are still not in the tax net. Previous governments made many attempts to register the retailers, but did not succeed. After carefully studying the issue, carrying out in-depth analysis and holding consultations with representatives of retailers, we have concluded that most of the retailers are willing to pay their due share of taxes, but only want a simple and easy method of doing so. Consequently, the retailers have been divided into two tiers or categories. The first tier comprises the following:

1. Those retailers who operate as part of national and international chain stores; or

2. Operate in air-conditioned shopping plazas; or

3. Have machines for credit or debit cards; or

4. Have monthly electricity bills in excess of Rs 50,000.

These retailers will be required to pay sales tax in the normal regime and to keep electronic cash register of approved specifications in order to record their transactions. Another important challenge of bringing the high-end retail trade is how to incentivize the consumers to demand a GST paid receipt from the retailer. In order to do so we shall not only launch an aggressive outreach program to educate the taxpayers but shall also launch a periodic prize scheme based on the GST paid receipt.

b. Simplified Sales Tax Regime for Retailers Tier-II: All remaining retailers will fall in the second tier. For these, we are introducing the simple mechanism of payment of sales tax due through their electricity bills. Thus, retailers having electricity bills of less than Rs.20,000 in a month shall be charged only 5% of the bill as sales tax on retail sales, while those with higher bills shall be charged 7.5% as sales tax on retail sales.

c. Sales Tax on Domestic Sales of Export Industries: The government desires to encourage exports. But at the same time, the facility meant for exporters should not extend to domestic sales, otherwise it will create distortions in the market. SRO 1125(I)/2011 was issued in order to encourage the five major export-oriented sectors ­ textiles, leather, carpets, surgical and sports goods. However, under this SRO, even imported finished goods were enjoying concessionary rates of sales tax.

Because of this notification, there was a great disparity between the concessionary rates of sales tax on imported finished goods of these five sectors sold in the local market against the standard rate. This was leading to distortion, evasion and malpractices. Accordingly, import of finished goods of these sectors are proposed to be charged to sales tax at standard rate, because they are meant for local consumption by affluent classes and do not contribute to exports.

d. Rationalization of Sales Tax on Steel Sector: The steel sector had been paying fixed sales tax at the rate of Rs.7/unit of electricity up to February 2013.

But this rate was reduced to Rs.4 per unit of electricity without any rationale, which is much below the normal rates. I am pleased to announce that the steel sector has expressed its resolve to come forward and contribute to the national cause, and all stakeholders have agreed to revive the rate from Rs.4 to Rs.7 per unit of electricity. The Government has also accepted their demand to collect withholding tax of their purchases through their electricity bills @ Rs.1 per unit of electricity.

e. Increase in Taxes on Tobacco: Pakistan is a signatory to WHO’s Framework Convention on Tobacco Control (FCTC), which demands increase in prices and taxes of tobacco to discourage consumption. In this regard taxes on tobacco are being increased as specified in the Finance Bill.

Customs

Mr. Speaker Sir

67. I will now present the proposals relating to Customs, which are as follows:

a. Exporters Facilitation: At present, six different facilitation schemes are available for export sector. It has been felt that complexity and multiplicity of these schemes creates problems for exporters. Therefore, we have decided to introduce a consolidated Export Facilitation Scheme. The scheme will be implemented after broad-based consultation with exporters.

b. Reduction in Maximum Rate of Tariff and Tariff Slabs: High customs tariff rates not only create barriers for trade liberalization, but lead to malpractices at operational level. Our Government has decided to reduce the maximum tariff and number of total slabs. As a first step towards tariff reforms, maximum rate of 30% is being abolished, bringing down the number of slabs to 6 and the highest tariff to 25%. However, luxury items consumed by wealthy segment of society are being subjected to regulatory duty equivalent to the above facility.

c. Minimum Import Duty: At present, 40% of imports are totally exempt for customs duty. For addressing the structural flaw in tariff and improving assessment and documentation, 0% slab in tariff is being substituted by 1%. However, socially sensitive items like petroleum products, fertilizers, and all food items etc. are being kept at 0% rate, through inclusion thereof in a new schedule to the Customs Act.

Tax Reforms Commission

Mr. Speaker,

68. During our deliberations and consultations in the budget making exercise we have received couple of detailed proposals on reform and rationalization of General Sales Tax and other taxes. I am grateful to FPCCI and other representative bodies of business for their detailed suggestions in this regard. In fact there is a need to carry out an in-depth analysis and review of the entire tax policy and tax administration in the country so that we may organize them along the contemporary needs.

Accordingly we have decided to establish a Tax Reforms Commission in the country with the objective of undertaking such an exercise. The Commission would comprise public finance experts, practitioners, businessmen, tax lawyers and retired civil servants. The composition and terms of reference of the commission will be announced shortly.

PART-III

Relief measures for government employees, pensioners and labour

Mr. Speaker

69. As you know, we are still in the stabilization mode as we are focusing on reducing public expenditures. However, it is imperative that we do the bare minimum that is possible within the limited resources available especially for lower grade employees. Accordingly, the following measures are announced:

(a) A 10% ad-hoc relief will be allowed to all federal government employees with effect from 1st July 2014;

(b) A 20% increase will be allowed to those employees in Grade-1 to 15 drawing fixed medical allowance of Rs.1000 per month;

(c) A 5% increase will be allowed in conveyance allowance to those employees working in Grade-1 to 15;

(d) The post of superintendent is being upgraded from Grade-16 to Grade-17;

(e) One pre-mature increment will be allowed to employees of Grade-1 to 4.

(f) For welfare of the labour class, and in line with the increase in pay of government employees, the minimum wage rate is also being increased from Rs.10,000to Rs.12,000.

70. Last year I had raised the minimum pension for government employees from Rs.3000 per month to Rs.5000, representing an increase of 67%. Considering the difficulties faced by low pension employees, I am announcing a further increase of Rs.1000 in minimum pension to make itRs.6000. This means that the minimum pension has been doubled since 1st July, 2013. A 10% increase in pension will also be allowed to all retired federal government employees.

Concluding Remarks

Mr. Speaker,

71. I have announced a budget of hope and aspirations. We had started this journey under the most challenging circumstances. The achievements we have made within a period of less than one year are remarkable. The economy has been set in a stable direction. It was not too long ago that some false prophets of doom, both international and local, had predicted that Pakistan’s economy will default and collapse in the month of June 2014. Allah has enabled us to prove them patently wrong.

72. All honest and impartial stakeholders are convinced that a serious, clean and purposeful economic environment is finally in place in Pakistan. This is the most fundamental requirement of a growing and prospering economy. Policy-making is nothing more than signalling, since it is the people who do the real hard work. Unambiguous and credible signals have gone all across that Pakistan is fully fit for doing business.

Mr. Speaker,

73. I have laid the budgetary proposals before this august House. In the end, I have only one request to make through your good self to the honourable members of the House that they should rest assured of our determination, honest intentions and our ever-lasting commitment to the national goals and targets. They are well aware that the prosperity of a country can be assured only through the peace and stability. The country which is in the grip of terrorism for the last one decade, now craves for peace and political stability.

Civilized nations address their issues through constitutional means. We will open-heartedly welcome any positive remarks, criticism and suggestion aimed at bringing about rectifications and improvements. I say this full conviction that instead of gathering in squares, intersections and street, let’s sit in this House and solve our problems. This nation has paid a heavy price for long dictatorships. Nothing positive can ever chaos and lack of peace.

Now this nation deserves reprieve. Our youth need appropriate education, the educated need employment, labourers need job and ample wages, the farmers need due compensation for their toil, our women have to play their role in the nation-building, our industries and factories demand energy, the dark villages are expecting electrification, and rural areas are to be equipped with the basic facilities, the poor need bread and butter, and above all Pakistan has to regain its lost glory among the community of nations.

All this is possible only if democracy and development are allowed to perpetuate, and we continue to march towards our goal hand-in-hand, for the pride of Pakistan and the betterment of its people.

74. Prime Minister Nawaz Sharif, who is expending his energies in transforming of our country is stated most succinctly by nation, who while addressing a mammoth 1947, had following to say:-

Do not be overwhelmed by the enormity of the task. There is many an example in history of young nations building themselves up by sheer determination and force of character. You are made of sterling material and are second to none. Why should you also not succeed like many other, like your own forefathers. You have only to develop the spirit of a Mujahid, You are a nation whose history is replete with people of wonderful grit, character, and heroism. Live up to your traditions and add to it another chapter of glory.

75. Perhaps, Allama lqbal had a similar determination of our destiny when he said:

Budget Speech 2014-15

Mr. Speaker,

76. Let me end my speech by a prayer that may Allah continue to bestow His mercies on Pakistan, protect its economic sovereignty and make it prosperous, powerful and a stable democracy. Ameen.

Pakistan Paindabad.

For more information, Contact:
Director General (Media)
Naveed Iqbal
Ministry of finance
Government of Pakistan
Room # 514, Block-’Q’, Finance Division,
Pak. Sectt. Islamabad
Phone: 92 51 9206382, 9211707
E-mail: naveed.iqbal377@gmail.com

The post Text of Finance Minister Ishaq Dar’s Budget 2014-15 speech appeared first on Business News Pakistan.

Islamabad, June 05, 2014 (PPI-OT):

RECEIPTS - SUMMARY
                                                                         (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description
                                                         2013-14      2013-14    2014-15
Federal Consolidated Fund (5+6-10)                      2,981,829   3,533,618   3,578,192
B     1   Tax Revenue Receipts                          2,671,414   2,513,945   3,129,210
          FBR Taxes                                     2,475,000   2,275,000   2,810,000
          Direct Taxes                                    975,700     891,000   1,180,000
          Indirect Taxes                                1,499,300   1,384,000   1,630,000
          Other Taxes                                     196,414     238,945     319,210
C     2   Non-Tax Receipts                                748,582   1,083,197     816,294
C01       Income from Property and Enterprise             239,913     321,274     191,992
C02       Receipts from Civil Administration etc.         316,782     389,515     417,452
C03       Miscellaneous Receipts                          191,887     372,409     206,850
3         Total Revenue Receipts (1+2)                  3,419,996   3,597,142   3,945,504
E     4   Capital Receipts                                487,702     635,699     484,259
E02       Recovery of Loans and Advances                  227,767     111,360      68,803
E03       Domestic Debt Receipts (Net)                    259,934     524,339     415,456
      5   Total Internal Receipts (3+4)                 3,907,698   4,232,841   4,429,763
      6   External Receipts                               576,419     714,112     868,610
          Loans                                           467,437     675,326     623,807
          Grants                                          108,982      38,786     244,803
      7   Total Internal and External Receipts (5+6)    4,484,117   4,946,953   5,298,373
      8   Public Accounts Receipts (Net)                  246,907     169,575     270,528
          Deferred Liabilities (Net)                      239,443     126,612     225,417
          Deposit and Reserves (Net)                        7,464      42,963      45,111
      9   Gross Federal Resources (7+8)                 4,731,023   5,116,528   5,568,901
     10   Less Provincial Share in Federal Taxes        1,502,288   1,413,335   1,720,182
     11   Net Federal Resources (9-10)                  3,228,736   3,703,193   3,848,719
     12   Cash Balance built up by the Provinces           23,101     183,045     289,289
     13   Credit from Banking Sector                      974,988     376,271     227,906
     14   Total-Resources (11+12+13)                    4,226,824   4,262,509   4,365,914

                                                             REVENUE RECEIPTS
                                                                 Tax Revenue
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
B               Tax Revenue
                a. FBR Taxes (i+ii)                     2,475,000    2,275,000   2,810,000
B01             i.Direct Taxes                            975,700      891,000   1,180,000
      B011      Taxes on Income                           948,700      876,910   1,163,821
      B015      Worker's Welfare Fund                      21,000       13,500      15,500
      B017-18   Capital Value Tax (CVT)                         -          590         679
                Income Support levy                         6,000            -          -
B02             ii.Indirect Taxes                       1,499,300    1,384,000   1,630,000
      B020-22   Customs Duties                            279,000      241,000     281,000
      B023      Sales Tax                               1,053,500    1,005,000   1,171,000
      B024-25   Federal Excise                            166,800      138,000     178,000
                b. Other Taxes                            196,414      238,945     319,210
      B026-30   Other Indirect Taxes (ICT)                  3,000        3,860       4,720
      B03064    Airport Tax                                    75           85          90
      B03083    Gas Infrastructure Development Cess        38,000       88,000     145,000
      B03084    Natural Gas Development Surcharge          35,339       39,000      46,400
      B03085    Petroleum Levy                            120,000      108,000     123,000
                1 Total Tax Revenue (a+b)               2,671,414     2,513,945  3,129,210

                                                              REVENUE RECEIPTS
                                                               Non-Tax Revenue
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
C              Non Tax Revenue
C01            a) Income from Property and Enterprise    239,913     321,274     191,992
      C01001   Railway                                       -           -           -
               Gross Receipts                             55,100      57,100      65,000
               Deduction: Working Expenses                55,100      57,100      65,000
      C01008   Pak. Telecommunication Authority           14,000       2,130      14,720
               Pak. Telecom. Authority (3 G Licenses)    120,000      89,000      56,000
               Regulatory Authorities                        368       2,452         350
      C01070   Profits Others                                  0      67,625           0
      C012-18  Total Mark up                              37,128      82,527      38,933
      C012     Mark up (Provinces)                        13,334      14,083      12,952
      C013-18  Mark up ( PSEs  and  Others)               23,795      68,444      25,981
      C019     Dividends                                  68,417      77,541      81,989
C02            b) Receipts from Civil Administration
               and Other Functions                       316,782     389,515     417,452
      C021-24  General Administration Receipts             1,399       6,378       2,874
      C02211   Share of Surplus Profits of the State Bank
               of Pakistan                               200,000     260,000     270,000
      C025     Defence Services Receipts                 112,135     118,569     140,220
      C026     Law and Order Receipts                      1,050       1,500       1,142
      C027     Community Services Receipts                   990       1,526       1,561
      C028-29  Social Services                             1,208       1,542       1,656
C03            c) Miscellaneous Receipts                 191,887     372,409     206,850
      C031-35  Economic Services Receipts                  2,548       2,870       2,993
      C036     Foreign Grants                             29,955     204,198      35,000
      C03806   Citizenship, Naturalization, Passport and
               Copyright Fees                             16,500      17,000      20,000
      C03905   Royalty on Crude Oil                       32,502      33,345      32,261
      C03906   Royalty on Natural Gas                     39,744      42,711      49,164
      C03910   Discount Retained on Local Crude Price     18,000      18,000      20,000
      C03915   Windfall Levy against Crude Oil            25,000      15,000      17,000
      C03917   Petroleum Levy on LPG                       1,000       1,000       1,000
               Others                                     26,639      38,285      29,432
C      2 Total Non-Tax Revenue (a+b+c)                   748,582   1,083,197     816,294
       3 Total Revenue Receipts (1+2)                  3,419,996   3,597,142   3,945,504

                                                           CAPITAL RECEIPTS
                                                                     (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15

E02 I.      Recoveries of Loans and Advances             227,767     111,360       68,803
E021        Provinces                                     34,793      38,691       39,418
E022-27     Others                                       192,974      72,669       29,386
        II. Total Domestic Debts Receipts (i+ii)      10,266,542  15,198,216   14,646,618
E031 i)     Permanent Debt Receipts                      457,514     686,254      516,419
            Pakistan Investment Bonds (Bank)              99,695     102,327       59,801
            Pakistan Investment Bonds (Non Bank)          85,465     533,927      269,827
            Ijara Sukuk Bonds                            272,354      50,000      186,791
E032 ii)    Floating Debt Receipts                     9,809,028  14,511,962   14,130,199
            Prize Bonds                                  159,625     160,122      171,080
            Market Treasury Bills                      3,727,949   6,097,740    6,365,130
            Treasury Bills through Auction             5,920,319   8,252,937    7,592,481
            Others Bills                                     835         863        1,208
            Ways and Means Advances                          300         300          300
E         4 Capital Gross Receipts (I+II)             10,494,309  15,309,575   14,715,421
            Domestic Debt Receipts (i+ii)             10,266,542  15,198,216   14,646,618
            Domestic Debt Repayment (page-17)         10,006,608  14,673,877   14,231,162
            Net Domestic Debt Receipts                   259,934     524,339      415,456
          5 Total Federal Internal Gross Receipts (3+4)13,914,306 18,906,718   18,660,925

                                                              EXTERNAL RECEIPTS
                                                               CAPITAL RECEIPTS
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
I    Loans                                               467,437      675,326      623,807
                 Project Loans                           159,165      168,896      174,843
                 Federal                                 102,289       97,946       92,835
                 Provincial                               56,876       70,949       82,008
                 Programme Loans                         110,272      249,386      201,464
                 Other Loans                             198,000      257,044      247,500
                 Islamic Development Bank                 49,500       51,450       49,500
                 Euro Bonds                               49,500      205,594       49,500
                 Sukuk Bond                                    0            0       49,500
                 China Safe Deposits                      99,000            0       99,000
II   Grants                                              108,982       38,786      244,803
                 Project Grants                           27,657       22,565       30,852
                 Federal                                   6,993        8,270        9,302
                 Provincial                               20,664       14,295       21,551
                 Tokyo Pledges                             1,119            0            0
                 Kerry Lugar                               1,006       16,221       15,951
                 Privatization                            79,200            0      198,000
6    Total External Receipts (I +II)                     576,419      714,112      868,610


                                                          PUBLIC ACCOUNT RECEIPTS
                                                         National Savings Schemes
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15

i.    G111    Investment Deposit Accounts (Savings
      Schemes)                                           817,072     971,976    1,129,671
      G11101   Saving Bank Accounts                      247,134     219,862      223,999
      G11106   Defence Savings Certificates               67,812      46,721       63,594
      G11111   Special Savings Certificates (Registered) 135,541     207,903      259,602
      G11112   Special Savings Accounts                  112,240     155,564      194,318
      G11113   Regular Income Certificate                 76,602     166,267      174,803
      G11126   Pensionery Benefits                        39,492      39,720       46,189
      G11127   Behbood Saving Certificate                117,251     130,858      146,168
      New Savings Schemes                                 15,000           -       15,000
      Short Term Savings Certificates                      6,000       5,081        6,000
ii.   Other Accounts                                       4,400       4,500        4,500
      G03109   Postal Life Insurance Fund                  4,400       4,500        4,500
iii.  G061 Provident Fund                                 54,000      60,000       60,000
      Total Receipts ( i+ii+iii )                        875,472   1,036,476    1,194,171
      1 Gross Receipts                                   875,472   1,036,476    1,194,171
      Gross Expenditure (Page-18)                        636,029     909,864      968,755
      Net Receipts                                       239,443     126,612      225,417

                                                         PUBLIC ACCOUNT RECEIPTS
                                                          Deposits and Reserves
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
   G      Deposits and Reserves
G06202 F.G.Employees Benevolent Fund (Civil)                446        676           710
G06203 F.G.Employees Benevolent Fund (Defence)                0        180           189
G06205 F.G.Employees Benevolent Fund (Pak.Post)              67        112           118
G06206 F.G.Employees Benevolent Fund (Pak.PWD)                4          4            5
G06209 F.G.Employees Benevolent Fund (N.S.)                   6          7            7
G06210 F.G.Employees Benevolent Fund (Mint)                   2          2            3
G06212 F.G.Employees Benevolent Fund (GSP)                    3          3            3
G06304 Workers Welfare Fund                              19,333     14,311       15,027
G06409 F.G.Employees Group Insurance Fund (Civil)             0         76           80
G06410 F.G.Employees Group Insurance Fund (Defence)           0          6            6
G07101 Post Office Renewal Reserve Fund                     261         43           43
G07104 F.G.Employees Group Insurance Fund (PPO)               2          2            2
G07106 PPO Miscellaneous                                      0     95,583      100,362
G08117 Railways Reserve Fund                              33041     33,500       35,175
G08121 Railways Depreciation Reserve Fund                   652        652          684
G10101 Pak. PWD Receipts     and    Collection Account      624          0            0
G10102 Foreign Affairs Receipt  and  Collection Account   5,696          0            0
G10106 Deposit Works of Survey of Pakistan                    7          4            4
G10113 Public Works/Pak. PWD Deposits                    93,239      4,207        4,417
G10304 Zakat Collection Account                           1,281          0            0
G11215 Revenue Deposits                                       0      2,185        2,295
G11216 Civil and Criminal Court Deposits                      0         98          103
G11218 Forest Deposits                                        0          7            7
G11220 Deposits in connection with Elections                 28         23           24
G11224 Deposits in connection with Defence                    0      1,779        1,868
G11225 Deposits in connection with AGPR                       0        207          217
G11230 Special Remittances Deposits                           0      1,210        1,270
G11238 Security deposits of supply cell                      41          0            0

                                                           PUBLIC ACCOUNT RECEIPTS
                                                            Deposits and Reserves
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
G         Deposits and Reserves
G11255 Defence Services Security Deposits                    -           220         231
G11256 Defence Services Misc. Deposits                       -       58,724       61,661
G11281 Deposit Account of fees realized by PNAC              6            0            0
G11290 Security deposit of Firms/Contractors               325           67           70
G12148 PM's Balochistan Earthquake Relief Fund
       2013                                                  0          461          484
G12205 Pakistan Minorities Welfare Fund                      0            2            2
G12206 Spl. Fund for Welfare  and  Uplift Minorities        14            0            0
G12308 Reserve Fund for Exchange Risk on Foreign
       Loans                                               876       25,836       27,127
G12412 Pakistan Oil Seeds Development Cess Fund             98           99          104
G12713 Income Tax Deduction from Salaries                    -           63           66
       Income Tax Deduction from
G12714 Contractors/Suppliers                                 -           44           46
G12729 Fund for Social Services                          1,935          832          874
G12738 National Fund for Control of Drug Abuse              46            3            3
G12745 Central Research Fund                                43            1            1
G12774 National Disaster Management Fund                   985            0            0
G12777 Sales Tax Deduction at Source                        -           487          511
G141   Coinage Account                                     298            0            0
       Others                                                2            9            8
2      Gross Receipts                                  159,360      241,725      253,808
       Expenditure (Page-20)                           151,896      198,762      208,697
       Net Deposits and Reserves Receipts                7,464       42,963       45,111
       Public Account - Summary
3      Gross Receipt (1+2)                           1,034,832    1,278,201    1,447,979
       Gross Expenditure (Page-20)                     787,925    1,108,626    1,177,451
7      Public Account Net Receipts                     246,907      169,575      270,528

                                                         EXPENDITURE - SUMMARY
                                                                       (Rs in million)
                                                         Budget      Revised      Budget
Object                                                  Estimates   Estimates   Estimates
Code              Description                           2013-14      2013-14     2014-15
            Current Expenditure on Revenue Account
01          General Public Services                    2,357,401    2,364,879   2,543,334
02          Defence Affairs and Services                 627,226      629,752     700,148
03          Public Order and Safety Affairs               78,462       77,039      86,450
04          Economic Affairs                              52,262       42,988      47,585
05          Environment Protection                           924          899         936
06          Housing and Community Amenities                1,912        1,558       2,012
07          Health                                         9,863        9,437      10,017
08          Recreation, Culture and Religion               6,950        6,633       7,060
09          Education Affairs and Services                59,277       63,442      64,014
10          Social Protection                              1,806        1,959       1,691
a.          Current Exp. on Revenue Account            3,196,082    3,198,586   3,463,245
b.          Current Exp. on Capital Account              241,384      205,216      64,168
1           Total Current Expenditure (a + b)          3,437,466    3,403,801   3,527,413
c.          Dev. Exp. on Revenue Account (i+ii)          495,498      488,725     416,814
i.          Dev. Exp. on Revenue Account (PSDP)          333,678      208,253     260,664
ii.         Other Dev. Exp. on Revenue Account           161,820      280,473     156,150
d.          Dev. Exp. on Capital Account (i+ii)          293,861      369,982     421,686
i.          Dev. Exp. on Capital Account (PSDP)          283,866      361,099     416,023
ii.         Other Dev. Exp. on Capital Account             9,995        8,883       5,663
            Total Public Sector Dev. Program (ci+di)     627,538      578,235     682,350
2           Total Development Expenditure (c+d)          789,358      858,707     838,500
            Total - Expenditure (1+2)                  4,226,824    4,262,509   4,365,914
3           Break-up of Expenditure
            Revenue Account (a+c)                      3,691,580    3,687,311   3,880,060
            Capital Account (b+d)                        535,245      575,198     485,854
            Total Expenditure:                         4,226,824    4,262,509   4,365,914

                                                     Current Expenditure on Revenue Account
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
01   General Public Service                             2,357,401    2,364,879     2,543,334
     011 Executive  and  Legislative Organs,
     Financial  and  Fiscal Affairs, External Affairs   1,966,586    2,002,079     2,119,013
     Debt Servicing                                     1,520,300    1,450,851     1,658,407
     Servicing of Foreign Debt                             89,015       78,516       100,640
     Foreign Loans Repayment                              366,761      263,582       333,174
     Servicing of Domestic Debt                         1,064,524    1,108,753     1,224,592
     Superannuation Allowances  and  Pensions             171,263      187,684       215,000
     Others                                               275,023      363,544       245,607
     012 Foreign Economic Aid                               1,751           92            92
     014 Transfers                                        337,165      335,929       370,782
     Provinces                                             87,363       89,841        74,737
     Others                                               249,802      246,088       296,045
     015 General Services                                   4,655        4,401         5,107
     016 Basic Research                                     2,830        2,671         3,041
     017 Research  and  Dev. General Public Services        8,857        8,948         9,037
     018 Admn. of General Public Service                    1,843        5,201         1,974
     019 Gen. Public Services not elsewhere defined        33,714        5,557        34,287
02       Defence Affairs and Services                     627,226      629,752       700,148
     021 Defence Services                                 625,336      627,856       698,259
     A01 Employees Related Expenses                       271,211      271,729       293,599
     A03 Operating Expenses                               162,217      164,652       180,250
     A09 Physical Assets                                  131,389      131,000       152,841
     A12 Civil Works                                       62,183       62,139        73,310
         Less Recoveries                                   (1,664)      (1,664)       (1,741)
     025 Defence Administration                             1,890        1,896         1,889
03       Public Order and Safety Affairs                   78,462       77,039        86,450
     031 Law Courts                                         3,328        3,295         3,906
     032 Police                                            72,499       71,437        79,834
     033 Fire Protection                                      150          141           155
     034 Prison Administration and Operation                   30           29            33
     035 R and D Public Order and Safety                       26           23            25
     036 Administration of Public Order                     2,428        2,114         2,496
04       Economic Affairs                                  52,262       42,988        47,585
     041 Gen. Eco., Commercial  and  Labour Affairs        14,940       10,184        10,692
     042 Agri., Food, Irrigation, Forestry  and  Fishing   20,430       17,835        20,523
     043 Fuel and Energy                                      642          865           671
     044 Mining and Manufacturing                           1,964        1,205         1,276
     045 Construction and Transport                        10,050        8,972        10,530
     046 Communications                                     2,804        2,697         2,502
     047 Other Industries                                   1,431        1,229         1,391
05       Environment Protection                               924          899           936
     052 Waste Water Management                               692          687           699
     055 Administration of Environment Protection             232          212           237
06       Housing and Community Amenities                    1,912        1,558         2,012
     062 Community Development                              1,912        1,558         2,012
07       Health                                             9,863        9,437        10,017
     071 Medical Products, Appliances and
         Equipments                                           260          252           100
     073 Hospital Services                                  8,180        7,740         8,306
     074 Public Health Services                             1,029          375           356
     076 Health Administration                                394        1,070         1,255
08       Recreation, Culture and Religion                   6,950        6,633         7,060
     081 Recreational and Sporting Services                     6           19             1
     082 Cultural Services                                    555          554           509
     083 Broadcasting and Publishing                        5,338        5,126         5,519
     084 Religious Affairs                                    781          690           762
     086 Admn. of Information, Recreation  and  Culture       270          244           269
09       Education Affairs and Services                    59,277       63,442        64,014
     091 Pre-Primary and Primary Education Affairs
     and Services                                           5,832        5,712         6,079
     092 Secondary Education Affairs and Services           7,434        7,474         7,873
     093 Tertiary Education Affairs and Services           43,364       47,335        47,693
     094 Education Services not Definable by Level            103           89            75
     095 Subsidiary Services to Education                     254          247           232
     096 Administration                                     1,505        1,262         1,275
     097 Education Affairs  and  Services not
         Elsewhere Classified                                 785        1,321           787
10       Social Protection                                  1,806        1,959         1,691
     107 Administration                                     1,242        1,441         1,210
     108 Others                                               564          518           481
a. Current Expenditure on Revenue Account               3,196,082    3,198,586     3,463,245

                                                      Current Expenditure on Capital Account
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
01          General Public Service                       241,384     205,216        64,168
      011   Repayment of Short Term Foreign Credits       40,916      43,459        27,484
      014   Transfers                                    200,468     161,757        36,684
            Federal Misc. Investments                    180,258     144,050         7,855
            Other Loans and Advances by the Fed. Govt.    16,008      17,707        18,572
       19   Gen. Public Services not Elsewhere Defined     4,203           -        10,257
04          Economic Affairs                                   -           -           -
       041  Gen. Eco., Commercial  and  Labour Affairs         -           -           -
       042  Agri., Food, Irrigation, Forestry  and  Fishing    -           -           -
       b.   Current Expenditure on Capital Account       241,384     205,216        64,168
       I.   Total Current Expenditure (a+b)            3,437,466   3,403,801     3,527,413

                                                    Development Expenditure on Revenue Account
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
01        General Public Service                         210,315      68,865     152,410
      011 Executive  and  Legislative Organs, Financial
           and  Fiscal Affairs, External Affairs          18,219      16,489         6,908
      014 Transfers                                       34,387      21,257        33,800
      015 General Services                               126,297         925        81,899
      016 Basic Research                                   2,575       2,012         1,181
      017 Research  and  Dev. General Public Services         30          20            16
      019 General Public Services not Elsewhere
          Defined                                         28,806      28,162        28,606
02        Defence Affairs and Services                     2,370         512         1,136
      025 Defence Administration                           2,370         512         1,136
03        Public Order and Safety Affairs                  4,341       2,875         4,057
      031 Law Courts                                       2,082       1,006         2,332
      032 Police                                           1,832       1,821         1,575
      033 Fire Protection                                     49          49            24
      036 Administration of Public Order                     378           0           125
04        Economic Affairs                                62,758      56,571        47,918
      041 Gen. Eco. Commercial and Labour Affairs          1,084         932           609
      042 Agri., Food, Irrigation, Forestry  and  Fishing 56,462      52,359        42,639
      043 Fuel and Energy                                     86          86           268
      045 Construction and Transport                       1,921         930         1,790
      046 Communications                                   2,905       1,964         2,283
      047 Other Industries                                   301         301           329
05        Environment Protection                              59          23            25
      055 Administration of Environment Protection            59          23            25
06        Housing and Community Amenities                  3,795      25,633         3,054
      061 Housing Development                                 17          17            15
      062 Community Development                            3,696      25,534         2,942
      063 Water Supply                                        82          82            97
07        Health                                          27,489      28,029        28,141
      073 Hospital Services                                1,263       1,100         1,007
      074 Public Health Services                           3,541       4,244         4,450
      075 Research and Development Health                    124         124           124
      076 Health Administration                           22,560      22,560        22,560
08        Recreation, Culture and Religion                   373         361           487
      081 Recreation and Sporting Services                   339         339           413
      082 Cultural Services                                   12          12            28
      083 Broadcasting and Publishing                         23          10            47
09        Education Affairs and Services                  21,121      24,336        22,436
      091 Pre  and  Primary Edu. Affairs  and  Services        0           0           256
      092 Secondary Edu. Affairs  and  Services                0           0           265
      093 Tertiary Edu. Affairs  and  Services            18,519      22,519        20,297
      095 Subsidiary Services to Education                    17          17            43
      097 Education Affairs  and  Services not
          Elsewhere Classified                             2,585       1,800         1,575
10        Social Protection                                1,057       1,047         1,000
      107 Administration                                   1,000       1,000         1,000
      108 Others                                              57          47             0
      i.  Dev. Exp. on Revenue Account (PSDP)            333,678     208,253       260,664
      ii. Other Dev. Exp on Revenue Account              161,820     280,473       156,150
      011 Executive  and  Legislative Organs, Financial
           and  Fiscal Affairs, External Affairs          75,020     227,482       118,150
      014 Transfers                                        9,500      10,838         5,000
      019 Gen. Public Services not Elsewhere
          Defined                                         37,300           0             0
      041 Gen. Eco. Commercial and Labour Affairs         10,000       9,700         8,000
      042 Agri., Food, Irrigation, Forestry  and  Fishing 30,000      30,000        25,000
      107 Administration                                       0       2,453             0
      c.  Dev. Exp. on Revenue Account (i+ii)            495,498     488,725       416,814

                                                    Development Expenditure on Capital Account
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
01         General Public Service                        277,354     352,010       410,087
      011  Executive  and  Legislative Organs, Financial
            and  Fiscal Affairs, External Affairs            255         199           255
      014  Transfers                                     224,483     299,195       358,127
      017  Research and Dev. General Public
           Services                                       52,616      52,616        51,705
04         Economic Affairs                                6,512       9,088         5,936
      041  Gen. Eco., Commercial and Labour Affairs           50          26            50
      042  Agri., Food, Irrigation, Forestry  and  Fishing   100         100           165
      044  Mining and Manufacturing                        1,880       1,390         1,148
      045  Construction and Transport                      7,746       9,091         4,972
           Less Recoveries from Railway                   (3,264)     (1,519)         (400)
      i.   Dev. Expenditure on Capital Account (PSDP)    283,866     361,099       416,023
      ii.  Other Dev. Exp. on Capital Account              9,995       8,883         5,663
      014  Transfers                                       9,995       8,883         5,663
      d.   Dev. Expenditure on Capital Account (i+ii)    293,861     369,982       421,686
      A. Public Sector Dev. Program (c i+di)             617,544     569,351       676,687
      B. Other Dev. Expenditure (c ii+d ii)              171,815     289,356       161,813
      II.   Total Development Expenditure (A+B)          789,358     858,707       838,500
      III. Total Exp. (Current+Development)            4,226,824   4,262,509     4,365,914

                                                           CAPITAL EXPENDITURE
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15

A101 i.    Domestic Permanent Debt                      292,579      318,673       266,484
           Pakistan Investment Bonds (Bank)              99,695      102,327        59,801
           Pakistan Investment Bonds (Non Bank)          10,465       33,927        19,827
           Foreign Exchange Bearer Certificates               5            5             5
           Foreign Currency Bearer Certificates               5            5             5
           US Dollar Bearer Certificates                      5            5             5
           Special US Dollar Bonds                           50           50            50
           Ijara Sukuk Bonds                            182,354      182,354       186,791
A104 ii.   Floating Debt                              9,714,028   14,355,204    13,964,678
           Prize Bonds                                  114,625      103,364       105,559
           Market Treasury Bills                      3,727,949    6,097,740     6,365,130
           Treasury Bills through Auction             5,870,319    8,152,937     7,492,481
           Other Bills                                      835          863         1,208
           Ways and Means Advances                          300          300           300
A10 IV.    Total Public Debt Repayment (i+ii)        10,006,608   14,673,877    14,231,162
V.         Total - Federal Consolidated Fund
           Disbursement (III+IV)                     14,233,432   18,936,385    18,597,075

                                                        PUBLIC ACCOUNT EXPENDITURE
                                                         National Savings Schemes
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15

       i. G111    Investment Deposit Accounts
                  (Savings Schemes)                      583,629     853,364       910,255
G11101            Savings Bank Accounts                  246,634     217,658       219,756
G11103            Khas Deposit Accounts                        5           4             4
G11104            Mahana Amadni Accounts                      40         70             80
G11106            Defence Savings Certificates            37,812      34,386        36,594
G11108            National Deposit Certificates                9           1             1
G11109            Khas Deposit Certificates                    3           2             2
G11111            Special Savings Certificates 
                  (Registered)                            89,041     215,829       248,202
G11112            Special Savings Accounts                73,740     161,494       185,718
G11113            Regular Income Certificate              46,602     120,561       116,480
G11126            Pensionery Benefits                     19,492      21,104        21,189
G11127            Behbood Saving Certificate              67,251      76,046        79,168
                  National Savings Bonds                       -           -            62
                  Short Term Savings Certificates          3,000       6,209         3,000
        ii.        Other Accounts                          2,400       2,500         2,500
G03109            Postal Life Insurance Fund               2,400       2,500         2,500
        iii. G061 Provident Fund                          50,000      54,000        56,000
1                 Total Expenditure ( i+ii+iii )         636,029     909,864       968,755

                                                        PUBLIC ACCOUNT EXPENDITURE
                                                          Deposits and Reserves
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
G         Deposits and Reserves
G06202 F.G.Employees Benevolent Fund (Civil)               341          719           755
G06203 F.G.Employees Benevolent Fund (Defence)              -           189           198
G06205 F.G.Employees Benevolent Fund (Pak. Post)            59         107           113
G06206 F.G.Employees Benevolent Fund (Pak. PWD)              4           4             4
G06209 F.G.Employees Benevolent Fund (N.S.)                  6           6             7
G06210 F.G.Employees Benevolent Fund (Mint)                  2           2             3
G06212 F.G.Employees Benevolent Fund (GSP)                   2           2             2
G06304 Workers Welfare Fund                             15,525       8,000         8,400
G06409 F.G.Employees Group Insurance Fund (Civil)           -           65            68
G06410 F.G.Employees Group Insurance Fund (Defence)         -            7             7
G07101 Post Office Renewal Reserve Fund                    254          43            43
G07102 Post Office Welfare Fund                              9          5              6
G07103 Post Office Improvement Fund                         -          162           170
G07104 F.G.Employees Group Insurance Fund (PPO)              2           1             1
G07106 PPO Miscellaneous                                     0      95,572       100,351
G08117 Railways Reserve Fund                             33500      33,500        35,175
G08121 Railways Depreciation Reserve Fund                  652         652           684
G10101 Pak. PWD Receipts  and  Collection Account          337          -             -
G10102 Foreign Affairs Receipt  and  Collection Account  1,769          -             -
G10106 Deposit Works of Survey of Pakistan                   3           4             5
G10113 Public Works/Pak. PWD Deposits                   90,045       6,907         7,253
G10304 Zakat Collection Account                            783          -             -
G11215 Revenue Deposits                                     -        2,178         2,287
G11216 Civil and Criminal Courts Deposits                   -            9            10
G11218 Forest Deposits                                      -            4             4
G11220 Deposits in connection with Elections                -            4             4
G11224 Deposit in connection with Defence                   -          972         1,021
G11225 Deposit in connection with AGPR                      -           94            98
G11230 Special Remittances Deposits                         -          811           851
G11238 Security deposits of supply cell                    316          31            33
G11255 Defence Services Security Deposits                   -          137           144
G11256 Defence Services Misc. Deposits                      -       17,694        18,579
G11281 Deposit Account of fees realized by PNAC             11          -             -
G11290 Security deposit of Firms/Contractors               518         203           213
G12140 PM's Flood Relief Fund 2010                       1,983          -             -
G12145 PM's Flood Relief Fund 2011                       1,403          -             -
G12148 PM's Balochistan Earthquake Relief Fund              -          789           828
       2013 Fund for Welfare  and  Uplift of Minorities
G12206 Special                                             261          11            11
G12305 Export Development Fund                             449       3,039         3,191
G12308 Reserve Fund for Exchange Risk on Foreign           700      25,835        27,127
G12713 L
Income Tax Deduction from Salaries                          -           59            62
G12714 Contractors/Suppliers                                -           39            41
G12729 Fund for Social Services                          1,784         700           735
G12745 Central Research Fund                                 1          -             -
G12774 National Disaster Management Fund                   882         200           210
G12777 Sales Tax Deduction at Source                        -            3             3
G141      Coinage Account                                  298          -             -
Others                                                      -            3             1
2 Total Expenditure Deposits  and  Reserves                151,896     198,762       208,697
VI Total Public Account Expenditure (1+2)              787,925   1,108,626     1,177,451

                                                    STATEMENT OF ESTIMATED CHARGED AND
                                                      VOTED EXPENDITURE MET FROM THE
                                                         FEDERAL CONSOLIDATED FUND
                                                                       (Rs in million)
                                                         Budget      Revised        Budget
Object                                                  Estimates   Estimates     Estimates
Code              Description                           2013-14      2013-14       2014-15
I.     Expenditure on Revenue Account                 3,691,580     3,687,311     3,880,060
       Current                                        3,196,082     3,198,586     3,463,245
       Development                                      495,498       488,725       416,814
       Total-Authorized Expenditure                   3,691,580     3,687,311     3,880,060
       Charged                                        1,544,253     1,477,362     1,683,504
       Voted                                          2,147,327     2,209,949     2,196,556
II.    Expenditure on Capital Account                10,541,852    15,249,074    14,717,015
       Current                                       10,247,991    14,879,092    14,295,329
       Development                                      293,861       369,982       421,686
       Total Authorized Expenditure                  10,541,852    15,249,074    14,717,015
       Charged                                       10,104,400    14,847,437    14,388,845
       Voted                                            437,452       401,637       328,170
III.   Total Expenditure met from Federal
       Consolidated Fund                             14,233,432    18,936,385    18,597,075
       Current Expenditure                           13,444,073    18,077,678    17,758,575
       Development Expenditure                          789,358       858,707       838,500
IV.    Total-Authorized Expenditure                  14,233,432    18,936,385    18,597,075
       Charged - Total                               11,648,653    16,324,799    16,072,349
       Voted - Total                                  2,584,779     2,611,586     2,524,726

                                                               SCHEDULE-I
                                                DEMAND FOR GRANTS AND APPROPRIATION FOR
                                             EXPENDITURE MET FROM THE FEDERAL CONSOLIDATED
                                              FUND FOR THE FINANCIAL YEAR COMMENCING ON
                                                     IST JULY, 2014 AND ENDING ON
                                                           30TH JUNE, 2015

                                                               SCHEDULE - I
                                        Demand-Wise Expenditure for Budget Estimates 2014-2015
                                                                                  (Rs. in million)
Demand                                                   Budget Estimates 2014-2015
             Ministries / Divisions
No.                                                     Charged        Voted             Total
001     Cabinet                                            -             150               150
002     Cabinet Division                                   -           4,755             4,755
003     Emergency Relief and Repatriation                  -             275               275
004     Other Expenditure of Cabinet Division              -           5,150             5,150
005     Aviation Division                                  -              87                87
006     Airports Security Force                            -           4,327             4,327
007     Meteorology                                        -             874               874
008     Capital Administration and Development Div.        -          14,259            14,259
009     Climate Change Division                            -             431               431
010     Establishment Division                             -           2,054             2,054
011     Federal Public Service Commission                  -             488               488
012     Other Expenditure of Establishment Division        -           1,125             1,125
013     National Security Division                         -              50                50
014     Prime Minister's Office                            -             779               779
015     Board of Investment                                -             213               213
016     Prime Minister's Inspection Commission             -              57                57
017     Atomic Energy                                      -           6,152             6,152
018     Stationery and Printing                            -              81                81
019     Commerce Division                                  40          4,834             4,874
020     Communications Division                            -           4,300             4,300
021     Other Exp. of Communications Division              -           2,323             2,323
022     Pakistan Post Office Department                    50         14,323            14,373
023     Defence Division                                   -           1,334             1,334
024     Survey of Pakistan                                 -           1,028             1,028
025     Federal Government Educational Institutions
        in Cantonments and Garrisons                       -           4,136             4,136
026     Defence Services                                   -         700,000           700,000
027     Defence Production Division                        -             555               555
028     Education Trainings and Standards in Higher
        Education Division                                 -           1,079             1,079
029     Finance Division                                   -           1,257             1,257
030     Controller General of Accounts                     -           4,200             4,200
031     Pakistan Mint                                      -             471               471
032     National Savings                                   -           2,405             2,405
033     Other Expenditure of Finance Division             120         15,906            16,026
034     Superannuation Allowances and Pensions          3,391        211,609           215,000
035     Grants-in-Aid and Miscellaneous Adjustments
        between the Federal  and  Provincial
        Governments                                    10,800         63,937            74,737
036     Subsidies  and  Miscellaneous Expenditure          -         508,180           508,180
037     Higher Education Commission                        -          43,000            43,000
038     Economic Affairs Division                          -             433               433
039     Privatization Division                             -             131               131
040     Revenue Division                                   -             297               297
041     Federal Board of Revenue                           -           3,024             3,024
042     Customs                                            -           6,123             6,123
043     Inland Revenue                                     -           9,790             9,790
044     Statistics Division                                -           1,798             1,798
045     Foreign Affairs Division                           -           1,100             1,100
046     Foreign Affairs                                    -          10,878            10,878
047     Other Expenditure of Foreign Affairs Division     250          1,806             2,056
048     Housing and Works Division                         -             122               122
049     Civil Works                                         6          3,133             3,138
050     Estate Offices                                     -             123               123
051     Federal Lodges                                     -              72                72
052     Industries and Production Division                 -             262               262
No.                                                     Charged        Voted              Total
053     Department of Investment Promotion  and 
        Supplies                                           -              13                13
054     Other Expenditure of Industries and
        Production Division                                -             622               622
055     Information, Broadcasting and National
        Heritage Division                                  -             756               756
056     Directorate of Publications, News Reels  and 
        Documentaries                                      -             224               224
057     Press Information Department                       -             528               528
058     Information Services Abroad                        -             639               639
059     Other Expenditure of Information,
        Broadcasting and National Heritage Division        -           5,043             5,043
060     Information Technology  and 
        Telecommunication Division                         -           3,030             3,030
061     Inter-Provincial Coordination Division             -           1,539             1,539
062     Interior Division                                  -             611               611
063     Islamabad                                          -           6,361             6,361
064     Passport Organization                              -           1,180             1,180
065     Civil Armed Forces                                 -          36,000            36,000
066     Frontier Constabulary                              -           7,015             7,015
067     Pakistan Coast Guards                              -           1,550             1,550
068     Pakistan Rangers                                   -          15,600            15,600
069     Other Expenditure of Interior Division             -           2,815             2,815
070     Narcotics Control Division                                     1,675             1,675
071     Kashmir Affairs and Gilgit Baltistan Division      -             267               267
072     Other Expenditure of Kashmir Affairs and
        Gilgit Baltistan Division                          -             877               877
073     Gilgit Baltistan                                   -             210               210
074     Law, Justice and Human Rights Division             -             830               830
075     Other Expenditure Law, Justice and Human
        Rights Division                                    32          3,015             3,047
076     District Judiciary, Islamabad Capital Territory    -             306               306
077     National Accountability Bureau                     -           1,798             1,798
078     National Assembly                               1,185          1,425             2,609
079     The Senate                                        896            643             1,539
080     National Food Security and Research Div.           -           3,235             3,235
081     National Health Services, Regulations and
        Coordination Division                              -           1,560             1,560
082     Overseas Pakistanis and Human Resource
        Development Division                               -           1,016             1,016
083     Parliamentary Affairs Division                     -             312               312
084     Petroleum and Natural Resources Division           -             277               277
085     Geological Survey                                  -             378               378
086     Other Expenditure of Petroleum and Natural
        Resources Division                                 -              77                77
087     Planning, Development and Reform Division                      1,027             1,027
088     Ports and Shipping Division                        -             618               618
089     Pakistan Railways                               2,043         62,957            65,000
090     Religious Affairs and Inter-Faith Harmony Div.     -             350               350
091     Council of Islamic Ideology                        -              84                84
092     Other Expenditure of Religious Affairs and
        Inter-Faith Harmony Division                       -             476               476
093     Science and Technology Division                    -             417               417
094     Other Exp. Science and Technology Division         -           4,715             4,715
095     States and Frontier Regions Division               -              89                89
096     Frontier Regions                                   -           6,507             6,507
097     Federally Administered Tribal Areas                -          15,462            15,462
098     Maintenance Allowances to Ex-Rulers                -               4                 4
099     Afghan Refugees                                    -             432               432
100     Textile Industry Division                          -             349               349
101     Water and Power Division                           -             400               400
102     Capital Outlay on Purchases by Kashmir
        Affairs and Gilgit Baltistan Division              -           2,198             2,198
103     Federal Miscellaneous Investments                  -          18,112            18,112
104     Other Loans and Advances by the Federal
        Government.                                        -          18,572            18,572
105     Development Expenditure of Cabinet Division        -           7,078             7,078
106     Development Expenditure of Aviation Division
                                                           -           1,402             1,402
107     Development Exp. of Capital Administration
        and Development Division                                       1,806             1,806
108     Development Expenditure of Climate Change
        Division                                                          25                25
109     Development Expenditure of Commerce
        Division                                                         363               363
110     Development Expenditure of
        Communications Division                            -             191               191
111     Development Expenditure of Defence
        Division                                           -           2,959             2,959
112     Development Expenditure of F.G.Educational
        Institutions in Cantonments and Garrisons          -               2                 2
113     Development Expenditure of Defence
        Production Division                                -             937               937
114     Development Expenditure of
        Education,Trainings  and  Standard in Higher
        Education Division                                 -           3,451              3,451
115     Development Expenditure of Finance Div.            -          21,714             21,714
116     Other Development Expenditure                      -          30,981             30,981
117     Development Expenditure Outside PSDP               -         156,150            156,150
118     Development Exp. of Economic Affairs
        Division                                                          57                 57
119     Development Expenditure of Revenue
        Division                                           -             152                152
120     Development Expenditure of Statistics
        Division                                                         170                170
121     Development Expenditure of Information,
        Broadcasting  and  National Heritage Division      -             154                154
122     Development Expenditure of Information,
        Technology  and  Telecommunication Division        -             556                556
123     Development Expenditure of Inter-Provincial
        Coordination Division                              -             413                413
124     Development Expenditure of Interior Division       -           3,855              3,855
125     Development Expenditure of Narcotics
        Control Division                                                 324                324
126     Development Expenditure of Kashmir Affairs
         and  Gilgit Baltistan Division                    -           9,230              9,230
127     Development Expenditure of Law Justice and
        Human Rights Division                              -           2,352              2,352
128     Development Expenditure of National Food
        Security and Research Division                     -           1,071              1,071
129     Development Expenditure of National Health
        Services, Regulation  and  Coordination Division   -          27,015             27,015
130     Development Expenditure of Petroleum and
        Natural Resources                                  -             117                117
131     Development Expenditure of Planning,
        Development and Reform Division                    -          81,378             81,378
132     Development Expenditure of Science and
        Technology Division                                -             904                904
133     Development Expenditure of Federally
        Administered Tribal Areas                          -          19,100             19,100
134     Development Exp. of Textile Industry Division      -             329                329
135     Development Exp. of Water and Power Division       -          42,577             42,577
136     Capital Outlay on Development of Atomic
        Energy                                             -          51,705             51,705
137     Capital Outlay on Federal Investments              -             226                226
138     Development Loans and Advances by the
        Federal Government                                 -         118,875            118,875
139     External Development Loans and Advances
        by the Federal Government.                    130,137         75,386            205,523
140     Capital Outlay on Works of Foreign Affairs
        Division                                           -             255                255
141     Capital Outlay on Civil Works                      -           2,214              2,214
142     Capital Outlay on Industrial Development           -           1,148              1,148
143     Capital Outlay on Petroleum and Natural
        Resources                                          -              50                 50
144     Capital Outlay on Ports  and  Shipping Division    -           2,576              2,576
145     Capital Outlay on Pakistan Railways                -          39,566             39,566
...     Staff Household  and  Allowances of the President 743             -                 743
...     Servicing of Foreign Debt                     100,640             -             100,640
...     Foreign Loans Repayment                       333,174             -             333,174
...     Repayment of Short Term Foreign Credits        27,484             -              27,484
...     Audit                                           3,523             -               3,523
...     Servicing of Domestic Debt                  1,224,592             -           1,224,592
...     Repayment of Domestic Debt                 14,231,224             -          14,231,224
...     Supreme Court                                   1,206             -               1,206
...     Islamabad High Court                              415             -                 415
...     Election                                        1,974             -               1,974
...     Wafaqi Mohtasib                                   372             -                 372
...     Federal Tax Ombudsman                             145             -                 145
        Total Expenditure                          16,074,442      2,608,289         18,682,731


                                                           SCHEDULE -III
                                                 OBJECT CLASSIFICATION WISE EXPENDITURE
                                                                          Rs. In million
                                                 Budget       Revised        Budget
Object
                        Description             Estimates    Estimates     Estimates
Code
                                                 2013-14      2013-14        2014-15

A01       Total Employees Related Expenses        449,088      451,570       504,092
A011       Pay                                     74,107       74,217        86,600
A011-1     Pay of Officer                          19,164       19,049        23,305
A011-2     Pay of Other Staff                      54,943       55,167        63,295
A012       Allowances                             374,981      377,353       417,492
A012-1     Regular Allowances                     369,169      371,505       408,390
A012-2     Other Allowances (Excluding TA)          5,813        5,848         9,102
A02        Project Pre-investment Analysis            164          114           144
A03        Operating Expenses                     634,174      434,630       561,353
A04        Employees Retirement Benefits          190,855      206,053       234,881
A05        Grants, Subsidies  and  Write off Loans799,057    1,050,701       802,565
A06        Transfers                               11,682       11,653         7,940
A07        Interest Payment                     1,154,937    1,187,723     1,326,178
A08        Loans and Advances                     222,661      299,261       343,164
A09        Physical Assets                        144,071      140,062       163,800
A10        Principal Repayments of loans       10,416,027   14,980,988    14,593,104
A11        Investments                            206,247      168,739        44,747
A12        Civil Works                             75,822       75,351        88,733
A13        Repairs and Maintenance                  7,834        7,774        12,029
TOTAL EXPENDITURE                   14,312,618   19,014,620    18,682,731

For more information, Contact:
Director General (Media)
Naveed Iqbal
Ministry of finance
Government of Pakistan
Room # 514, Block-’Q’, Finance Division,
Pak. Sectt. Islamabad
Phone: 92 51 9206382, 9211707
E-mail: naveed.iqbal377@gmail.com

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