The deadlock between the PPP and PML-N over the new fiscal year budget has ended after successful negotiations, clearing the way for the federal budget to be presented in the National Assembly on June 12.
Negotiations between the PPP and the technical committee headed by Deputy Prime Minister Ishaq Dar concluded successfully in Islamabad.
Following the talks, the delay in presenting the federal budget came to an end, with the National Assembly and Senate expected to meet today as preparations continue for the June 12 budget presentation.
NFC Award formula to remain unchanged
According to sources, the two sides agreed not to make any changes to the current formula of the National Finance Commission award.
Also Read: Govt, PPP near budget deal after key huddle in Islamabad
The agreement on the NFC formula was among the key issues settled during the talks between the federal government and the PPP.
PSDP reduced before budget presentation
The federal government has cut Rs126 billion from federal development funds even before presenting the budget.
As a result, the Public Sector Development Programme for the next fiscal year has been limited to Rs1,000 billion, equal to the original PSDP target set for the current fiscal year.
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The federal government has also decided to ban all new development projects in the upcoming fiscal year. However, new projects related to the Ministry of Defence and the Ministry of Interior will be exempt from the ban, as national defence and peace have been declared priority areas.
Provinces agree to maintain development spending
Punjab, Sindh and Khyber Pakhtunkhwa have agreed to keep their development expenditure at the current level. Punjab may reduce its proposed development budget of Rs1,450 billion by more than Rs150 billion.
Sources said the reduction in development spending will create fiscal space of around Rs500 billion.
Under the understanding between the PML-N and PPP, the four provinces will collectively provide grants of more than Rs1,200 billion to the federation.
Also Read: Federal-provincial resource-sharing dispute delays budget
The federal government expects to receive Rs650 billion from Punjab, Rs300 billion from Sindh, Rs180 billion from Khyber Pakhtunkhwa and Rs110 billion from Balochistan.
Sources said the federation will return this amount to the provinces over the next few years.
Defence budget, dam projects
Sources said the defence budget is proposed to be kept at around Rs3,000 billion in the next fiscal year. Additional funds have also been proposed for the Diamer Bhasha, Mohmand and Dasu dam projects in the new budget.
The government is preparing to provide tax relief of around Rs50 billion to the salaried class. Sources said people earning more than Rs183,000 per month are likely to receive relief in the upcoming budget.
The tax target for the current fiscal year is Rs13,050 billion, while the tax target for the next fiscal year is likely to be Rs15,264 billion.
IMF approval still required
The budget will be finalized after consultation with and approval from the International Monetary Fund. Sources said the federal development programme may be expanded again if additional resources are obtained from the provinces.
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