Pakistan unveils $47 billion federal budget, allocates 41% to debt servicing

Pakistan's Finance Minister Miftah Ismail is presenting the annual budget 2022-23 in the National assembly on June 10, 2022. (AFP)
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Updated 11 June 2022

Pakistan unveils $47 billion federal budget, allocates 41% to debt servicing

  • Government sets an inflation target of 11.5%, raises salaries of employees by 15%
  • Country earmarks $7.4 billion for defense, $3.9 billion for development projects 

KARACHI: Pakistan’s Finance Minister Miftah Ismail on Friday presented Rs9.52 trillion ($47 billion) federal budget for fiscal year (FY) 2022-23, allocating around 40 percent to service the South Asian country’s foreign and domestic debts. 

Grappling with a widening current account deficit, currency depreciation and record inflation, the Pakistani government targets 5 percent GDP growth in FY23 that is lower than the 5.97 percent of the outgoing year. 

The budget is aimed at fiscal consolidation to convince the International Monetary Fund (IMF) to release the much-needed bailout payments for the cash-strapped South Asian nation of 220 million. 

“The total expenditures of the federal government will be Rs9,502 billion ($47 billion) out of which the debt servicing would be Rs3,950 billion ($19.5 billion), while for the next year, the PSDP (Public Sector Development Program) would be Rs800 billion ($3.9 billion),” Ismail said, while presenting the budget in the lower house of Pakistan parliament, the National Assembly. 

“For the defense of the country, Rs1.5 trillion ($7.4 billion) and for Civil administration’s expenditures Rs550 billion ($2.7 billion) have been earmarked, and for payments of pension Rs530 billion ($2.6 billion) have been allocated.” 

During his speech, Ismail said Budget 2022-23 was a “growth budget,” based on a well-thought-out strategy to boost economic growth, control inflation and increase revenue generation. 

The finance minister said the government had set an inflation target of 11.5 percent and a tax-to-GDP ratio of 9.2 percent. The fiscal deficit target has been set for 4.9 percent of the GDP, while the export target has been set at $35 billion. 

He said the government would provide targeted subsidies to protect the marginalized segments of the country in the next fiscal year. 

“To facilitate the public, a targeted subsidy of Rs699 billion ($3.4 billion) has been allocated, while in the form of grants, Rs1242 billion ($6.2 billion) have been included in BISP (Benazir Income Support Program) and Bait-ul-Mal [semi-autonomous charity organization].” 

The Federal Board of Revenue’s (FBR) revenue collection has been estimated at Rs7 trillion ($34.6 billion) for the next fiscal year.  

“This includes Rs4.1 trillion ($20.3 billion) share of provinces. The net revenue with the federal government will be Rs4,904 billion ($24.2 billion). The non-tax revenue will be Rs2 trillion ($9.8 billion),” Ismail said. 

The country has raised the tax rate on banking companies from 39 percent to 42 percent, including 3 percent “Super Tax,” which is expected to raise Rs15-20 billion ($74.2-$98 million) in revenue, according to the budget. 

The capital gains tax on the sale of immovable property has been increased to 15 percent, if sold within one year. This rate will become zero over the period of six years. Withholding tax on filers and non-filers on the acquisition of property has been increased to 2 percent and 5 percent, respectively.  

The finance minister announced that immovable property, meant to park money and valued above Rs25 million ($0.127 million), would be subject to a deemed tax. The income for such deemed tax would be 5 percent of the fair value of such property, he added. 

“The major part of the wealth of rich people is parked in the real estate sector in Pakistan. This is a double-faceted menace. It leads to the accumulation of unproductive assets and raises the prices of housing for the poor and lower-income groups,” finance minister said. 

“We intend to correct this imbalance. Therefore, all persons who have more than one immovable property exceeding Rs25 million situated in Pakistan shall be deemed to have received rent equal to 5 percent of the fair market value of the immovable property and shall pay tax at the rate of 1 percent of the fair market value of the said property. However, one house of each individual will be excluded.” 

The government has decided to impose an advance tax of 1 percent on foreign transactions through debit/credit cards, which would be 2 percent for non-filers. 

Speaking of the relief measures, the finance minister announced a 15 percent increase in salaries of government employees, along with the merger of ad hoc allowances. 

He said the tax exemption slab for salaried class has also been increased from Rs600,000 ($2,968) to Rs1.2 million ($5,937). 

“This step will benefit the salaried class and enhance business activities and consumption. The slab for business individuals and associations of persons has been also been increased from Rs 400,000 to Rs 600,000,” Ismail said. 

“Prime Minister Shehbaz Sharif wants to provide maximum relief to the people of the country, particularly those who are unable to bear the burden of rising inflation.” 

He also announced tax exemption on the import and local supply of solar panels, saying soft loans from banks would be arranged to purchase solar panels for people with less than 200 units of power consumption. 

Financial experts, however, believe the Rs7 trillion revenue generation target, which is 17 percent higher than the target in FY22, would be hard to achieve, owing to the slow economic growth.  

“It will be a challenge to achieve this target due to economic slowdown and lower collection from oil sales. Please note that tax collection (sales tax, duties, petroleum levy) from oil is roughly around 22 percent of total tax collection,” Muhammad Sohail, the chief executive of Topline Securities, a brokerage house, told Arab News. 

“Budget FY23 is an attempt to satisfy the IMF on key matters relating to revenue collection, subsidy reductions and attainment of fiscal discipline.” 

The IMF and Pakistani officials concluded talks last month, with the fund asking for bailout program objectives, including fiscal consolidation, to be put back on track. 

It is unclear when the global lender plans to consider clearing the release of over $900 million of the latest tranche of the $6 billion, 39-month program Pakistan entered in 2019. 

One of the key steps, a removal of costly fuel subsidies, has already been implemented by the government, with fuel prices being raised by 40 percent. 

Economists say they were not expecting an “expansionary budget” under the current situation. 

“The budget under the present circumstances couldn’t be expansionary. Debt servicing and defense alone take the largest chunk. The net tax and non-tax income of the federal government is too inadequate to meet current expenses, what to speak of the development outlay,” Dr. Ikram ul Haq, a Lahore-based economist, said. 

“The twin menaces of fiscal deficit, coupled with current account and trade deficits, are hard to counter in the coming days, given the high inflation and the unsustainable debt burden.” 

Industrialists and traders say the budget is contrary to the expectation of a tougher one. 

“The budget is not a difficult one as was expected. The government of the few months has presented a good budget,” said Zubair Motiwala, chairman of Businessmen Group at the Karachi Chamber of Commerce and Industry (KCCI). 

“We are thankful for removing duty on solar panels. The decision of a dispute resolution mechanism is a welcoming step it was our persistent demand. The decision of tax adjustment on industrial raw material is also a good one.” 

The federal government has allocated Rs24 billion for health sector and Rs17 billion for imparting training in the information technology (IT) sector, providing youth with laptops, improving network and promoting IT exports. 

Irfan Iqbal Shaikh, president of the Pakistan Chamber of Commerce and Industry (FPCCI), said presenting the budget in the current situation was a “daunting task.” 

“The FPCCI had given proposals for the budget and many have been accommodated in the budget. The GDP target of 5 percent for the next fiscal year is a right move,” he said. 

Revival of Saudi-Iran relations 'good news' for Muslim world — leading Pakistani cleric

Updated 27 March 2023

Revival of Saudi-Iran relations 'good news' for Muslim world — leading Pakistani cleric

  • Saudi Arabia, Iran agreed to revive diplomatic relations in talks brokered by China earlier this month
  • PM's aide on Middle East affairs, leading Pakistani cleric praises Saudi crown prince for promoting peace

ISLAMABAD: Revival of diplomatic relations between Saudi Arabia and Iran is "good news" for the Muslim world, Pakistani prime minister's special representative on Middle East, Hafiz Muhammad Tahir Mahmood Ashrafi, said on Monday. 

On March 10, Saudi Arabia and Iran agreed to reestablish diplomatic relations and reopen their embassies within two months following years of tensions between them. The agreement between the two sides was brokered by China. 

In a joint statement, Tehran and Riyadh both acknowledged respect for the sovereignty of each other's states and agreed on the need for non-interference in internal affairs of countries. 

Pakistan had welcomed the initiative, calling it an “important diplomatic breakthrough."

Ashrafi, who heads the Pakistan Ulema Council (PUC)—a Muslim body that comprises leading religious scholars and clerics in Pakistan—said in a statement that the resumption of ties between the two arch-rivals would prove to be "good news" for the Muslim Ummah. 

"He [Ashrafi] said that the restoration of Iran-Saudi Arabia relations is a good news for the Muslim Ummah and the role of Pakistan's great friend China in this regard is very positive and commendable," a statement by the PUC quoted Ashrafi as saying. 

Ashrafi said the Islamic world was currently embroiled in turmoil due to external interference, extremism and sectarian violence. "The restoration of Saudi Arabia-Iran relations will bring many benefits to Pakistan," Ashrafi said, adding that the Islamic world must solve its problems through unity.

He praised Saudi Arabia's Crown Prince Mohammed bin Salman for playing an active role in promoting peace. 

"The role played by the Crown Prince of Saudi Arabia, Mohammed bin Salman, under the patronage of Khadim-e-Harmain Al-Sharifain Shah Salman bin Abdulaziz, is being appreciated all over the world for the end of wars and for the cause of peace," he added. 

In response to a question, Ashrafi referred to Saudi Arabia as the "center and great power" of the Islamic world.

Speaking on the issue of occupied Palestine and Indian-administered Kashmir, the cleric said that Saudi Arabia, China and Russia should also play their "full role" in resolving the crisis. 

"Pakistan and Saudi Arabia have the same position on the issue of Palestine, until a free and independent Palestinian state is established, relations with Israel cannot be thought of," he said.

Pakistan-origin Humza Yousaf wins race to be Scotland's next leader

Updated 27 March 2023

Pakistan-origin Humza Yousaf wins race to be Scotland's next leader

  • Humza Yousaf wins bid to be Scotland's next leader after bitterly fought contest
  • Yousaf, son of a Pakistani man, says Scotland needs independence "more than ever"

LONDON: Scottish nationalists picked Humza Yousaf to be the country's next leader on Monday after a bitterly fought contest that exposed deep divisions in his party over policy and a stalled independence campaign.

The 37-year-old practicing Muslim succeeds Nicola Sturgeon as leader of the governing Scottish National Party (SNP) and will take over as head of the semi-autonomous government once he wins an approval vote in the Scottish parliament.

Yousaf, who will be the first Muslim to lead a country in Western Europe, said he would concentrate on tackling the cost of living crisis, ending the divisions in the party, and making a renewed push for independence.

"The people of Scotland need independence now, more than ever before and we will be the generation that delivers independence," he said in a speech in Edinburgh after the results were announced.

Yousaf's victory was confirmed at the national rugby ground after a six-week campaign where the three candidates spent much of the contest criticizing each other's record in a series of personal attacks.

The SNP's unity, which had been one of its strengths, broke down over arguments about how to achieve a second independence referendum and the best way to introduce social reforms such as transgender rights.

Yousaf takes over a party with an overriding objective to end Scotland's three-centuries-long union with England. His predecessor stepped down after the British government repeatedly blocked a route to a new vote on independence.

While about four in 10 Scots support independence, according to a poll this month, the departure of Sturgeon - a charismatic and commanding leader - may initially slow some of the momentum behind a break up of the United Kingdom.


Yousaf won 52% of the vote of SNP members in the second round of counting, beating Kate Forbes, the finance secretary, who got 48%. Ash Regan, who had quit the government because of her opposition to proposed changes to gender recognition, was eliminated in the first round.

Coree Brown Swan, a lecturer in politics at Queen's University Belfast, said it would be difficult for the party to unite after a divisive leadership contest.

"It's a broad church of a party, which incorporates lots of different ideologies and opinions on things beyond independence," she said.

The frontrunner to replace Sturgeon, Yousaf has stressed continuity with her record, including her push to make it easier for transgender people to gain official recognition to change their gender.

Yousaf has spoken of the need to focus on building the case for independence and achieving consistent support for the movement, adding that he was open minded on which process to pursue once that level of support was achieved.

He pointed to his own background - born in Glasgow, with a father from Pakistan and mother from Kenya - and views as examples of the inclusive, socially liberal and multi-ethnic Scotland that the SNP has promoted.

During the campaign, Yousaf appeared more relaxed than Forbes, a member of the Free Church of Scotland, in balancing his religious views with the party's socially progressive policies.

While Forbes faced criticism when she announced her opposition to same-sex marriage, Yousaf said he supports it. In 2016, Yousaf took his oath of allegiance in the Scottish parliament in Urdu while wearing a kilt, and he has referred to himself as coming from a "bhangra and bagpipes" heritage.

Scotland voted against independence by 55% to 45% in 2014. Britain's vote to leave the EU two years later when most Scots wanted to stay, and Scotland's handling of the coronavirus pandemic, brought new support for independence.

However, an opinion poll this month showed the backing for independence dropped to 39%, or 46% when 'don't knows' are excluded. That compares with a record 58% in 2020.

Asked if the British government would grant permission for Yousaf to hold an independence referendum, Prime Minister Rishi Sunak's spokesperson said its position had not changed, and people's priorities were healthcare and the economy rather than a new vote on secession.

Battered Pakistan play for prestige against Afghanistan in UAE T20 today

Updated 27 March 2023

Battered Pakistan play for prestige against Afghanistan in UAE T20 today

  • Afghanistan beat Pakistan by 7 wickets on Sunday to take 2-0 unassailable lead in series
  • Skipper Shadab Khan is leading a young side missing Shaheen Afridi, Babar Azam, and others

ISLAMABAD: A battered Pakistan cricket team will take on Afghanistan at the Sharjah Cricket Stadium for the third T20 match between the two sides today, Monday, after losing the first two matches of the series last week. 

Afghanistan beat Pakistan by seven wickets in the second T20 match to take an unassailable 2-0 lead in the three-match series on Sunday. 




Needing 30 off the last three overs, and 22 from the last two, Afghan batters Najibullah Zadran and Mohammad Nabi hit a six each off pace bowler Naseem Shah in the penultimate over to reduce the target to five runs.

Pakistan is playing the three-match series to "compensate" Afghanistan after Australia called off its scheduled ODI series against Afghanistan last month. Cricket Australia said the decision was taken due to the Taliban government's increasing restrictions on Afghan girls and women in the country. 

Pakistan Cricket Board (PCB) chief Najam Sethi had announced that Pakistan decided to rest senior players such as skipper Babar Azam, Shaheen Shah Afridi, Muhammad Rizwan, Haris Rauf and Fakhar Zaman, for the series. 

He said the series would prove as a platform for upcoming youngsters and Pakistan Super League (PSL) stars to perform at the international level. 

Skipper Shadab Khan is leading the Pakistani side against Afghanistan. 

Pakistan condemns ‘reprehensible’ Israeli raid on Al-Aqsa Mosque

Updated 27 March 2023

Pakistan condemns ‘reprehensible’ Israeli raid on Al-Aqsa Mosque

  • Israeli troops on Saturday stormed the Al-Aqsa Mosque, drove out worshippers
  • Pakistan urges international community to take “urgent action” against Israeli aggression

ISLAMABAD: Pakistan’s foreign office on Monday condemned Israel’s “reprehensible” raid on the Al-Aqsa holy mosque in Jerusalem last week, calling upon the international community to take “urgent action” to end Israeli hostilities.

Israeli forces barged into the Al-Aqsa Mosque, the third holiest religious place of worship for Muslims around the world, on Saturday and forced worshippers out on the pretext that they were radicals planning riots.

The site is the third holiest in Islam and the holiest for Jews, who refer to it as the Temple Mount. It has long been a flashpoint for Israeli-Palestinian violence.

According to Palestinian officials, Israeli has killed at least 90 Palestinians this year as Tel Aviv steps up raids in Palestinian towns.

In response to Saturday’s raid on the Al-Aqsa Mosque, the Palestinian Foreign Ministry called on the world to force Israel to comply with its commitments and “halt violations of holy sites in Jerusalem, including Al-Aqsa Mosque, before it is too late.”

“Such reprehensible attacks on Al-Aqsa Mosque by Israeli occupation forces, during the holy month of Ramadan, have become a regular feature in recent years,” Pakistan’s Ministry of Foreign Affairs (MoFA) said in a statement.

Islamabad said such acts were not only a “grave violation” of the Palestinian people’s right to freedom of religion and belief but also “an affront to the religious sentiments of over 1.5 billion Muslims around the world.”

“Pakistan calls upon the international community to take urgent action to put an end to the Israeli transgressions that have been particularly ascendant since the beginning of this year,” MoFA said.

Pakistan reaffirmed its “unstinted support” for Palestinians and renewed its demand for an independent Palestinian state, with pre-1967 borders, calling it a “lasting solution” for the Israel-Palestine crisis.

Artists from Pakistan, UAE collaborate for moving performance at Sharjah Biennial

Updated 27 March 2023

Artists from Pakistan, UAE collaborate for moving performance at Sharjah Biennial

  • Performance featured English, Urdu and Arabic readings and a flute composition
  • ‘Yet Still Moving’ took place on March 8 at Bait Obaid Al Shamsi Art Square 

KARACHI: Artists from Pakistan and the UAE who collaborated for a performance at this year’s Sharjah Biennial called it an “amazing experience” to work with and learn from artists from around the world who came together for the large-scale contemporary art exhibition that takes place once every two years in the United Arab Emirates.

Sharjah Biennial 15: Thinking Historically in the Present (SB15) opened on February 7, 2023, and will run through June 11, featuring over 150 artists from more than 70 countries. The event was conceived by the late Nigerian art critic curator Okwui Enwezor and is curated by Hoor Al Qasimi, a leading figure in the international art world and the director of the Sharjah Art Foundation.

In a major honor, Pakistani visual artist Naiza Khan, who works between Pakistan and the United Kingdom, was invited by Qasimi to develop the performance and filmic work for SB15. Khan also conceived a performance, Yet Still Moving, that brought together three readers and a flutist for an improvised, polyphonic, trilingual reading that took place on the evening of March 8 at the Bait Obaid Al Shamsi Arts Square.

Besides Khan, the performance features visual artist and theater practitioner Asma Mundrawala, Sharjah-based actor Nabeel Al Mazem and Lahore-based flutist Haider Rahman.

“Staging this in Sharjah was very important for me and I wanted the performance to be grounded in this region of UAE,” Khan told Arab News on Monday.

“I had planned the performance to be trilingual, with Arabic, Urdu and English, so that it was inclusive of the audiences in Sharjah and not only accessible to an English-speaking audience. There are a lot of people working in UAE who come from South Asia, and so Urdu, which is my mother tongue, was also important.”

(L-R) The picture posted on March 10, 2023, shows Flutist Haider Rahman, visual artist Naiza Khan, visual artist and theater practitioner Asma Mundrawala and Sharjah-based actor Nabeel Al Mazem at Sharjah Biennial in Sharjah, UAE. (@naiza_khan_art/Instagram)

According to the website of SB15, the performers of Yet Still Moving “create an improvised polyphonic reading that examines how the passage of time changes both a place and the artist as chronicler.”

“The performance makes an embodied walking map— through cities, monsoons and bodies of water— and invites audiences to be a part of this ‘making-scape’,” the website said. 

A special composition by Haider Rahman accompanies the readers and is based on the melodic framework called Raag Megh Malhar, traditionally associated with monsoon clouds.

The performance, Khan said, reflected her long engagement with Manora Island that sits just off the coast of the Pakistani port city of Karachi, and with other urban landscapes of cities she had re-visited over the last fifteen years. 

“We had about 100 plus visitors attend, people came from Dubai as well as Abu Dhabi. We were all very pleased with the positive response,” Khan said. “The prominent curator and writer, Octavio Zaya, said this performance was like, ‘seeing politics in poetry and poetry in politics’.”

The remote rehearsals for the project began in early 2022 on zoom, and included writing and editing the script, followed by translations into Urdu and Arabic. The filming was done in London, Karachi and Sharjah.

“I didn’t feel like there were any borders between us,” Al Mazem, who read the Arabic script, told Arab News on Sunday.

“It is very nice to engage the people and artists in UAE, mainly Sharjah, with the artists [across the world]. They will get a lot of information, ideas, and a lot of beautiful things to do. I am happy to work with Pakistani artists. It was an amazing experience.”

Though the performance took place in Sharjah, the audience included people from Germany, Europe, America, Japan and the Middle East: “The Arab people were happy. They got our message.” Al Mazem said. 

Flutist Rahman said he chose Raag Megh Malhar for the composition “as the work was based around water.”

“Raag Megh Malhar is associated with water and monsoon and it instantly gelled with it,” Rahman, who has been practicing eastern classical music for over 25 years and has represented Pakistan on several international platforms, told Arab News on Sunday.

Mundrawala, a practitioner of dramatized readings who read the Urdu script of the performance, said it was an “exceptional” experience.

“Engaging the audience through language and oral storytelling strategies is part of my artistic skills and strengths. I lent these abilities to the project and simultaneously embraced the knowledge and qualities that the other participants brought to it in order to work toward a cohesive whole,” she told Arab News on Sunday.

“It was wonderful to perform in the Bait al Shamsi courtyard, with its serene and inviting environs. The audience was very appreciative and engaged.”