ISLAMABAD: The Federal Cabinet on Tuesday approved Budget Strategy Paper (BSP) for next fiscal year envisaging Rs1.1 trillion for defence, Rs1.6tr for debt servicing and 5.3pc fiscal deficit in the absence of any foreign aid for budgetary support.
Presided over by Prime Minister Shahid Khaqan Abbasi, the meeting also approved revised estimates for current fiscal year because of some key slippages on the expenditure side including 5.5pc fiscal deficit for the current year, instead of 4.1pc target. This was despite a Rs251bn cut in the development programme of the federal government and Rs100bn cuts in provincial development plans.
Informed sources told Dawn that the BSP presented by secretary finance to the cabinet estimated the next year expenditure at Rs5.237tr compared to Rs4.753tr expenditure estimated for the current year.
Development spending to be cut, focus on salaries, defence, subsidies and debt service in 2018-19
Prime Minister’s Adviser on Finance Dr Miftah Ismail, however, told journalists that next year’s budget outlay would be around Rs5.5tr. The estimates would be finalised on Monday next.
The BSP put the defence allocation for next year at Rs1.1tr compared to Rs920bn for the current year. The cabinet also approved revised estimate for defence with a Rs80bn expenditure overrun.
The meeting was informed that an amount of Rs36bn was being proposed for up to 15pc increase in salaries and pensions for the next year but a final decision would be made on the budget day. As such, an amount of Rs342bn was proposed for pensions next year compared to Rs248bn budgetary allocation for the current fiscal year.
The cabinet was informed that pensions overshoot target by a wide margin and hence the allocation was revised to about Rs320bn and approved by the cabinet. The provinces would get about Rs2.55tr next year compared to Rs2.38tr allocation for this year.
The estimates for running expenditures for next year were put at Rs445 billion compared to Rs377bn allocation for current year. The target for subsidies was set at Rs179bn for next year compared to Rs144bn allocated for the current year. The cabinet also approved a Rs20bn revision on this head, putting subsidy related expenditure at Rs164bn for the current year.