THE government has pulled back the entire calendar by a month to announce the sixth federal budget of its five-year tenure on April 27 — a first in Pakistan’s history — and it plans to get it passed by parliament before May 17.

While Prime Minister’s adviser on Finance, Revenue and Economic Affairs Dr Miftah Ismail announced that it would be a “technocratic” approach to transition the economy to the next government without political objectives, it will have some popular vibes, nevertheless.

Also read: The budgetary framework

For example, the government has intentions to raise the threshold for income tax exemption by two and a half times to Rs1 million from Rs400,000 per annum at present. It also intends to reduce income tax rates for all categories.

A final shape will emerge close to the budget presentation depending on the resource envelop and the practicability of adding 400,000 fresh taxpayers to the tax net with the help of the National Database and Registration Authority.

The central focus of next year’s budget will be to attain higher growth without new taxes and yet achieve 0.3 per cent higher tax-to-GDP ratio, according to Mr Miftah. Therefore, the Federal Board of Revenue’s tax target would be above Rs4.5 trillion from around Rs4tr this year.

The main concern before the finalisation of an early budget schedule is the quality of the Economic Survey 2017-18 and the macroeconomic performance by key sectors given the fact that the data would at best cover nine months and in some cases even eight months.

At one point the prime minister’s economic adviser saw no harm in publishing the survey after the budget, to allow it to complete its usual cycle instead of compromising on its quality, since it held relevance for researchers and academics at home and abroad.

He agreed to follow the traditional budget cycle on the argument that the Annual Plan Coordination Committee (APCC) and the National Economic Council (NEC) would have based their decision-making for next year on even less than nine months of macroeconomic data.

On top of that, the data would still remain ‘provisional’ even if the survey was published in July. The debate would, nevertheless, have ramifications for economic growth numbers. For one, the data on wheat production would at best be a guesstimate based on standing crop.

The crop always plays a critical role in finalising the GDP growth rate because it accounts for almost 10pc of the total value added in agriculture and 2pc of GDP. There have been examples in the past where the size of wheat produce was tinkered with to alter growth numbers even when budgets were announced in June.

As per the revised budget calendar, the economic survey 2018 would be out on April 26, followed by the budget announcement on April 27 and a post-budget presser on April 28. This would enable provincial governments to announce their budgets in the next eight days.

The current assemblies’ term comes to an end on May 31.The budget strategy paper (BSP) envisaging broad macroeconomic targets and budget outline would be presented to the federal cabinet within this week and priorities committees would meet the next week to finalise expenditure requirements and development needs of the line ministries.

All the principal accounting officers have been directed to submit their budget documents by the end of this month. The APCC meeting has been tentatively scheduled for the first week of April to finalise the development programme of the federal and provincial governments, followed by its approval by the NEC in the second week of April.

Consultations would continue on the sidelines with trade and industry chambers. The planning commission has already been directed to “seal the PSDP (Public Sector Development Programme)” at end-February position.

This means that no funds could be diverted from one project to another or from one agency to another, and an initiative unable to take off in eight months of the year should remain frozen – all unless prior clearance of the ministry of finance and the prime minister in exceptional cases.

That may help contain PSDP consumption at 80-85pc of allocation, except in cases of higher than targeted foreign flows to funded projects. There are indications that the federal PSDP would not be allowed to go beyond Rs900 billion to create a cushion for limiting fiscal deficit below 5pc of GDP and make up for revenue losses.

The government has already taken into confidence the Pakistan Peoples Party’s leadership on the direction of the budget and would be arranging another larger session with major political parties through the National Assembly speaker for a briefing and broad-based agreement on a neutral budget envisaging mostly revenue and expenditure streams.

A proposal to make a Rs200-250bn block allocation in the PSDP for the next government to launch its priority schemes soon after coming to power has been shelved and no new project is being taken in hand except for a couple of non-controversial projects of national importance.

The government has also announced to withdraw regulatory duties on imports of raw materials imposed earlier this year and to bring down the number of withholding taxes, saying that these were slowing down aggregate demand and adding to the cost of doing business.

Published in Dawn, The Business and Finance Weekly, March 19th, 2018