The Ministry of Finance is likely to allocate Rs. 3.52 trillion for the payment of debt servicing on public debt for the next fiscal year.
Sources from the ministry revealed on Friday that officials who are involved in budget preparation are considering allocating Rs. 3.52 trillion for debt servicing on public debt, including external and domestic obligations, for the next fiscal year, Rs. 450 billion more than Rs. 3.07 trillion for the current fiscal year.
It is expected that Rs. 2.983 billion of the total projected amount for debt servicing will be utilized for domestic debt and Rs. 516 billion will be used for the external public debt during the next fiscal year, according to the initial estimate.
It is pertinent to mention that the country’s public debt stock has reached Rs. 42 billion.
The sources added that Prime Minister Shehbaz Sharif’s economic team is working on the Federal Board of Revenue’s (FBR) tax target. It is likely to set the FBR’s tax collection target around Rs. 7.25 trillion for the next fiscal year, which is almost Rs. 1.1 trillion higher than the revised target of Rs. 6.1 trillion for the current fiscal year.
The International Monetary Fund (IMF) wants the FBR to collect Rs. 2,711 billion from direct taxes, Rs. 3,295 billion from sales tax, Rs. 843 billion from Customs duties, and Rs. 406 billion from Federal Excise Duties (FED) during the next fiscal year, as per the sources.
The target is nearly Rs. 350 billion higher than what tax authorities believe can be generated in FY 2022-23 without imposing new taxes.
The IMF had asked to take more tax measures to bridge the gap, which was not workable in the current political circumstances. The sources said that the IMF had asked Pakistan for the Rs. 7.25 trillion tax target besides fulfilling the commitments made by the previous Pakistan Tehreek-e-Insaf (PTI) government to withdraw the tax exemptions and revise the tax slabs for salaried individuals.
The rationalization of tax slabs will almost double the tax burden on the middle-income and upper-middle-income groups although the Minister for Finance, Miftah Ismail, had said that the tax burden on salaried individuals will not be increased.
The FBR collected Rs. 4.86 trillion in taxes during the first 10 months of the current fiscal year, leaving itself with the task of collecting another Rs. 1.24 trillion in just two months to achieve the revised annual target.