On Wednesday, Federal Finance Minister Muhammad Aurangzeb announced the budget proposals for the financial year 2024-25. These proposals are intended to provide an all-encompassing plan for a nation striving to overcome an economic crisis. Despite the necessity for new loans and stringent measures, this budget reflects a concerted effort to balance the economic landscape and address the critical challenges faced by the country.

The federal budget for the fiscal year 2024-25 is set at 18,877 billion rupees, with a projected deficit of 8.5 billion rupees, which constitutes 5.9% of the GDP. This significant deficit underscores the nation’s ongoing struggle with its finances. To bridge this gap, the budget introduces direct and indirect additional taxes amounting to 38 trillion rupees, the highest in the country’s history. Such measures are seen as crucial steps in generating the necessary revenue to stabilize the economy.

The total revenue/receipts are estimated at 12,970 billion rupees, with provinces sharing 7,438 billion rupees, reflecting a collaborative effort to distribute financial resources effectively across the nation.

A substantial portion of the budget, amounting to 9,775 billion rupees, is allocated for interest payments on loans. This allocation highlights the pressing debt situation and the significant burden of debt servicing on the national exchequer. Amid ongoing negotiations for a higher volume and longer-term loan program from the International Monetary Fund (IMF), the budget incorporates the IMF’s proposals. Finance Minister Muhammad Aurangzeb mentioned in an interview that the IMF would review the budget if required, indicating the government’s commitment to aligning with international financial standards.

The budget proposals show that the salaried class will remain under pressure, with five new tax slabs introduced. Non-filers will face stringent measures, including a ban on foreign travel, to encourage compliance and broaden the tax base. The decision to impose additional taxes reflects the government’s effort to increase revenue but also raises concerns about the financial burden on the middle class.

In an effort to mitigate the impact of inflation, the budget proposes a 25% increase in salaries for government employees from Grade 1 to 16 and a 20% increase for those above Grade 16. This measure is seen as necessary to help employees cope with rising living costs. Additionally, a 15% increase in pensions will provide some relief to retired employees, while setting the minimum wage at 37,000 rupees per month offers support to workers across various institutions. These measures are aimed at cushioning the impact of inflation and ensuring that employees and retirees can maintain their standard of living.

The Benazir Income Support Program sees a 27% increase in allocation, totaling 593 billion rupees. This increase is intended to enhance social safety nets and support the most vulnerable segments of society.

Several initiatives, including financial autonomy programs, will be introduced under this program to promote economic empowerment and self-sufficiency among the beneficiaries.

The defense sector receives a significant allocation of 21 trillion 22 billion rupees, which is 263 billion rupees more than the previous year. This increase underscores the importance of national security and the need to ensure that the defense forces are well-equipped to handle emerging threats. The public sector development program allocates 14 trillion rupees for various projects, including foreign assistance of 3 trillion 16 billion rupees. These funds are earmarked for infrastructure development, healthcare, education, and vocational training, reflecting the government’s commitment to long-term economic growth and development.

Education receives particular attention in the budget, with 25 billion 75 crore rupees allocated for development schemes and 66 billion 31 crore rupees for higher education initiatives. These investments are aimed at improving the quality of education, enhancing vocational training, and ensuring that the workforce is equipped with the necessary skills to compete in a global economy.

In terms of sector-specific provisions, the budget proposes to increase the petroleum levy to 20 rupees per liter, affecting fuel prices and potentially increasing transportation costs. However, amid rising costs, the reduction in prices of solar panels offers a glimmer of hope for sustainable energy solutions. This measure is aimed at promoting renewable energy and reducing the nation’s dependence on fossil fuels.

Healthcare remains a priority, with a focus on ensuring that medicines, which are crucial for saving lives and restoring health, remain affordable and easily accessible. The budget recognizes the importance of basic commodities such as milk and sugar, which are essential parts of the diet for both children and adults. These items should be protected from inflationary pressures to ensure that they remain within reach of the average household.