Budget FY24: Govt plans to launch Eurobond to generate $2bn

The Dollar-starved government has planned to generate $2 billion through the launch of Eurobonds in the upcoming budget 2023-24.

As the dollar inflow dried up after the International Monetary Fund (IMF) reluctance to oblige Pakistan, the budget makers are finding it hard to make ends meet.

However, the government hopes to generate more than $22bn through foreign loans and the Eurobond is a part of the strategy for the budget.

Despite failure to launch international bonds during the outgoing fiscal after IMF’s refusal to revive EFF (Extended Fund Facility), poor credit ratings given by global rating institutions and increased bond rates, the government once again plans to go for it.

Other sources

The government has also proposed a levy on all kinds of assets and increasing withholding taxes on cash withdrawals and registration of motor vehicles in the upcoming budget for 2023-24.

The government also plans to raise salaries and pensions of government employees from grade 1 to 16 and also for employees from 17 to 22 in the range of 30% and 20%, respectively.

The pension bill would be more than the salary bill of the federal government. The total budget outlay has been envisaged over Rs14.2 trillion for the upcoming budget whereby the Federal Board of Revenue’s (FBR) tax collection is fixed at Rs9.2 to Rs9.5 trillion and the non-tax revenue target at Rs2.5 trillion.

In order to achieve a primary balance of 0.1% of GDP, the provinces are expected to generate a 1% revenue surplus in order to achieve the primary balance into a slightly positive range in the next budget. The debt servicing is going to consume a major chunk of Rs7.5 trillion in the next budget.