Federal budget is the financial plan of the government regarding anticipated national revenues and expenditures. It states how much money the government is willing to spend during one fiscal year, what it intends to spend it on, and where it expects to get the money to pay for that expenditures.
In short, keeping track of how much money comes in, how much money goes out and how much is left over is a budget. It is also known as the Annual Financial Statement of the country.
How a budget is passed?
A government budget is generally passed by the legislature body, then it receives assent of the president, and finally it is presented by the finance minister to the nation on the National Assembly floor before culmination of the outgoing fiscal year.
The financial year in Pakistan begins on July 1 and ends on March 31.
Types of Budget
A national budget is classified in three categories:
Balanced: A budget is said to be a balanced budget if the government spending is equal to the government receipts in a year.
Deficit: The budget is deficit when the government expenditure exceeds the government revenues.
Surplus: It is surplus when the government receipts are more than its expenditures.
Importance of a Budget
The federal budget holds paramount importance for a number of reasons including reducing inequality in distribution of income and wealth, public accountability, planned approach to government’s activities, reallocation of infinite resources, tax and non-tax receipt, GDP growth, economic stability and eradication of poverty.
National defence, infrastructure development, education, agriculture and health are the key components of the budget.
In April 2018, the previous government had unveiled the federal budget 2018-19 with an outlay of Rs5,932 billion.
The major focus of the budget was on stimulating the economic growth. This was a deficit budget targeting fiscal deficit [income-expenditures gap] of 4.9 percent.
The federal government had proposed Rs1,100 billion for national defence, an increase of little over 10 percent from the revised estimates of Rs998 billion for the year 2017-2018 to cater to needs of the armed forces and other defence-related establishments.
What to expect from new budget?
Special Assistant to Prime Minister on Information and Broadcasting Dr Firdous Ashiq Awan has claimed that it would be an ‘austerity-oriented budget’ to reflect manifesto of the Pakistan Tehreek-e-Insaf (PTI) as expenditures of federal ministries/ divisions and institutions will be slashed.
The budget for the armed forces will remain unchanged as they have already announced to cut their expenditures.
Dr Firdous Ashiq Awan said the budget would ensure a sustainable economy and it will present a long term way forward to set economic goals for the next five years.
“Presenting a people and poor friendly budget is the top priority of the government,” she said.