Federal Budget 2022-2023 : An Overview & Policy Recommendations

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Pakistan’s economy depriviated during the FY 2021-22 in a similar manner as many other developing countries due to COVID and despite assiduous efforts, the government could not rail the economy back on exponentially growing track. Therefore, a lot of pressure has been exerted on policy makers to come up with a budget for FY 2022-23. This policy brief entails considerable recommendations for the upcoming budget.

Defense Budget:

Recommendations for defense budget are listed as follows:

  • A 10 % increase in the overall defense budget for the tri-services.
  • A special 5 % grant of the total defense budget for acquiring new defensive equipment and upgradation of existing equipment which can range from Naval vessels to Aerial defense equipment to strengthen the deterrence capabilities of Pakistan against rising threat from the Eastern neighbor.

Reduction of expenditures

  • There is a need of reducing expenditures for the government to achieve the budget goals as the economic crisis are on the rise. In this regards, “Targeted subsidies” can be adapted so the poor and working class are incentivized and the rich are not let off the hook. In addition to this, the expenses of running of government can also cut down in the similar way as in the last budget, thus reducing expenditures for FY 2022-23.

Taxations and management of finances

  • The previous government had set an ambitious goal of collection of taxes to an enormous number of Rs 5.83 trillion which stayed underachieved. IMF recommendations for FY 2021-22 were Rs 6 trillion which remained far from achieved. The average increase in tax collection remained between 6-8% only and is considered as a failure in achievement of tax collection goals despite the government’s massive emphasis on registration of individuals of FBR.
  • Using systematic plans for collection of taxes, tax collection goals can also be increased in accordance with IMF recommendations.

 

Development Budget

The following options are recommended for this year’s development budget:

  • Increase the development budget by 5%.
  • Do not commit to any new projects and pay special focus on the completion or bringing the ongoing projects in line with the existing deadlines.
  • Establish an effective monitoring and evaluation unit that can visit all the projects on sight and give an impartial assessment of the projects.

Education Budget:

The following options are recommended for this year’s educational budget:

  • Increase the HEC domestic scholarship budget by 20%. The scholarship should be awarded for research degrees.
  • Increase the research grants budget of HEC for university faculty by 20%.
  • Allocate appropriate funds for the trainings of teachers to promote modern techniques in STEM learning. The trainings should invite teachers from across the country.

Health Budget:

Under the 18th amendment, health is now a provincial subject and possesses few fault lines in the system. Therefore, the following recommendations are entailed for this year’s budget.

  • All the basic health units and Tehsil Headquarter Hospitals should be upgraded with utmost efficacy.
  • Funds should be allocated for disaster management courses for young doctors to enhance their preparedness and efficiency in case there is an occurrence of any natural or man-made disaster.
  • A certain amount should be allocated for procurement of medicines and supplies in case of an emergency.

Technology Budget:

The following policy options are recommended for this year’s technology budget.

  • A special fund should be established for cutting edge research on artificial intelligence.
  • Allocate fund for the development of hardware in Pakistan as there is a massive influx of simplest technological hardware in terms of imports.
  • Allocate funds for Pakistan to fund in international technology fairs to be attended by senior scientists and top developers of Pakistan.

China Pakistan Economic Corridor (CPEC) Budget:

The following policy options are recommended for this year’s CPEC budget in this regards.

  • CPEC funds should be separated from the development budget of the country.
  • A total of Rs. 200 billion should be allocated towards CPEC projects. The breakdown of these funds should be on the following lines:
  • A total of Rs. 100 billion to be allocated to CPEC projects in Balochistan. The proposed distribution is 30 Billion to Gwadar and rest to other projects including Bostan Special Economic Zone. This will not only generate jobs but would also address the issue of deprivation among the Baloch population.
  • At least 10 percent of the total fund should be spent on the protection and security of the Chinese working in Pakistan.

Climate Change Mitigation Budget:

The following policy options are recommended for this year’s climate change’s budget.

  • Allocate Rs. 10 billion to transfer government buildings on solar energy.
  • A special 50% reduction on import duty for big business who plan to transfer their corporate offices on solar energy.
  • Allocation of Rs 14 billion for billion tree tsunami and Rs 91 billion for the construction and development of water reservoirs during the previous FY should be increased in order to adapt and change to counter global warming.

Conclusion

COPAIR aims to keep working on the lines of transforming Pakistan into a vibrant developed economy and the core idea of devising these recommendations is to provide a hand to the relevant authorities in their setting of priorities while formulating the budget for FY 2022-2023.

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