The Federal Cabinet on Friday approved the federal budget for the fiscal year 2020-21, which will now be submitted to the National Assembly for approval, sources told Geo News.
According to sources, PM financial adviser Abdul Hafiz Shaikh briefed the Cabinet about the budget and took him into confidence.
However, sources in the Cabinet said there were disagreements on whether the government should approve the pay hike of the federal government and decided not to increase the salaries and pensions of government employees by the end of this year.
Pakistan is catching up with the coronavirus pandemic as the country's upcoming budget is expected to see a 12% increase in defense spending and a 2.3% increase in the fiscal year 2020-21.
According to a Reuters Planning Commission Working Paper, "GDP growth is targeted at 2.3% for 2020-21, contributing to agriculture (2.9%), industry (0.1%) and services (2.8%)."
This forecast is very good compared to the 0.2% contraction in 2020-21 introduced by the World Bank before June. The multilateral lender will see -2.6% growth this fiscal year, ending June 30, and the government expects a contraction of 0.4%.
Budget expenditure
The March 2016 budget strategy paper predicts a 3% growth in 2020-21 before the epidemic hit.
The paper, viewed by Reuters, has a fiscal deficit of 7.6 trillion Pakistan rupees ($ 46.76 billion) and 6.9% of GDP - less than 9% below the current Ministry of Finance projection for 2019-20.
Of this, Rs 2,235 trillion (90 19.90 billion) was earmarked for service servicing and Rs 1,402 trillion (63 8.63 billion) - an increase of 12% over the previous year.
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