Islamabad:
On Wednesday, the National Economic Council approved an enlargement of national development spending of RS 3.9 billion rupees, as some provinces asked to examine the National Finance Commission and reopening the issue of agricultural income tax with the International Monetary Fund.
The Federal Public Sector Development Program approved by the NEC 2025-26 shows the government’s political priorities to appease allies and spend more on the roads. It has approved reduced budgets for space and atomic energy programs in Pakistan, health and education, but increased allowances to specific Sindh and parliamentary programs.
Led by Prime Minister Shehbaz Sharif, NEC also set the economic growth target at 4.2% and 7.5% inflation for the next financial year 2025-26. NEC is the constitutional organization of the country with the mandate to approve macroeconomic and development plans.
NEC also expressed its concerns with regard to the growing population and has shown that resolution to find a solution, because economic growth during this exercise was almost equal to the rate of population growth.
The NEC has approved the RS1 million rupees for the Federal Public Sector Development Program and 2.9 Billions of Rupes for Provincial Annual Development Plans. The Cumulative Budgets of RS 3.9 Billions cancel the realities of the severe budgetary field, because the federal government has even gone to the reduction of certain critical allowances proposed to make room for more politically oriented development expenses.
Against its previous plan to allocate 50 billion rupees for discretionary expenses on parliamentary regimes, the allowance was approved at 70 billion rupees, the NEC document showed. Not only has this, the federal government further increased the expenses of the development project of the three -day allowance provinces of 93.4 billion rupees to almost 106 billion rupees.
The room was created by further reducing health and education expenses of the level approved by the annual plan coordination committee on Monday. The allowance of the Higher Education Commission is considerably reduced to RS39.4 billion rupees while the budget of the Ministry of Health is reduced to RS14.3 billion. To make room for political projects, the allocation of projects in the power sector has been reduced by 104 billion rupees offered to 90 billion rupees. But the allocation of the water sector was increased to Rs133 billion, compared to the proposal of RS119 billion previous rupees.
Compared to the budget approved by the APCC on Monday, the budget of the research committee on the atmosphere of space and increase (Suparco) increased from 24.2 billion rupees to only 5.4 billion rupees while the budget of Pakistan Atomic Energy Commission is reduced by 4.7 billion rupees to 781 million rupees.
The budget was finalized by a committee including the Dar-Prime Minister Ishaq Dar and the PM’s political advisor Rana Sannuallah Khan.
Such important benefits to provincial projects are in violation of commitments to the IMF to reduce federal spending on provincial projects.
The sources said that some NEC members had discussed the weak growth of the agricultural sector of only 0.6% during this financial year and urged to modify economic policies, including the high cost of inputs. The participants in the meeting said that Sindh had asked to review the income tax of agriculture and to take it with the IMF.
The finance secretary, Imdad Ullah Bosal, has not commented on whether the Ministry of Finance will address the issue with the IMF.
The four provincial governments have adopted new laws of agriculture income tax, but they have not yet been applied. There is a good chance that the IMF would not send any requests of this type.
The government of Khyber Pakhtunkhwa addressed the question of delay in the reopening of the NFC price, because the provincial government requires a higher part in the light of the merger of tribal districts. The Prime Minister assured the KP government to summon the NFC meeting in August.
However, the government has further reduced the allocation of KP merged districts by 70 billion rupees to 65.4 billion rupees that had been approved on Monday by the APCC.
The Punjab government has raised the issue of higher taxes on agricultural machines.
The NEC approved 2.86 billions of rupees for the four provincial governments, the highest expenses of Punjab worth RS1.2 Billions. Khyber-Pakhtunkhwa will spend 417 billion rupees. The Sindh government plans to spend 995 billion rupees and the Balutchistan government offers 280 billion rupees for development.
The development allowances proposed by the four provinces are around 860 billion rupees more than the IMF has included in its plan. This means that the provinces will not be able to spend all allowances, or the excess species in cash of the IMF will not be achieved.
The NEC also examined the implementation of the annual plan for this exercise and approved the economic objectives for the next taxman. He also took an examination of the implementation of the PSDP for the current financial year, taking note of the low use of funds.
The NEC also discussed the CDWP stage report and the schemes approved by CDWP and Ecnec in the past year. The NEC authorized the publication of the 13th five-year plan 2024-29 and approved the implementation framework of Pakistan Uraan.
Exports are planned at $ 35.3 billion, while foreign funding should exceed $ 39.4 billion in the next fiscal year. Imports are planned at $ 65.2 billion, the deficit in the current account estimated at $ 2.1 billion for the next financial year.
Currently, 1,071 development projects with a total cost of RS 13.4 Billions are being implemented. These projects require an end of Rs 10.2 Billions of additional rupees, and the Ministry of Planning estimates that it would take more than a decade to finish them all.
The NEC also approved to publish the economic plan for five years 2024-29. The NEC was informed that the 13th five -year plan was updated following stakeholder consultations and is ready to be published
The five -year plan is aimed at a balanced regional and equitable development, strengthen the orientation of the exports of the economy – the dynamic SME sector – Social protection and poverty reduction – Improve the quality of human resources – move on to the economy of knowledge – adaptation and attenuation strategy to combat climate change.
The Prime Minister launched “Uraan Pakistan” on December 31, 2024 and the NEC approved its implementation framework on Wednesday.
