Pakistan Budget_Initial Impressions - Not the dreaded serpent, (AKD Research, Jun 10, 2022)
AKD Federal Budget FY23
Pakistan Budget: Initial Impressions – Not the dreaded serpent!
- In sharp contrast to recent history, Finance Minister Miftah Ismail presented Budget’23 to a rather well behaved audience, targeting higher collection from corporates, as well as measures to increase tax net, particularly on the real estate and retail side.
- Budget’23 envisages a total budgetary outlay of PkR9,502bn compared to PkR8,487bn in Budget’22, up 12%YoY.
- Net revenue receipts have been projected at PkR4,904bn with total revenue at 9,004bn. Of this, FBR collection target is projected at PkR7,004bn for FY23 versus PkR5,829bn in FY22
- Direct Taxes are budgeted to contribute PkR2,573bn to total tax collection with Indirect Taxes contributing PkR4,431bn
- Budget deficit for FY23 has been forecast at PkR3,798bn or 4.9% of GDP versus 8.1% for FY22 (AKD Estimate)
- A Primary surplus has been projected at 0.2% of GDP for FY23 vs. a deficit of ~2% in FY22 (AKD Estimate)
- For FY23, the GoP is targeting GDP growth at 5.0% compared to FY22 number at 5.97%
- Despite attempts at consolidation, Federal PSDP has been budgeted at PkR727bn for FY23 compared to revised outlay of PkR550bn in FY22
- CPI is projected at an optimistic 11.5% for FY23 vs. 11.7% in FY22
- Steps on increasing tax net are a big plus in the budget, particularly the decisions on real estate and fixed income and sales taxes on retailers
- From Market’s vantage, initial impressions of Budget’23 are in quite contrast to earlier dreaded forecasts, where additional taxation measures on corporate profitability (income above PkR300mn to be taxed an additional 2%) are likely to be overshadowed by increasing taxation of real estate, an attempt to eliminate the arbitrage other asset classes currently have over equities.
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