The government is anticipated to present a budget ranging from Rs13-15 trillion for the fiscal year 2023-24, according to a budget preview report by Topline Securities. This substantial increase is attributed to the record-high markup cost caused by the soaring interest rates. The proposed budget target of Rs9-9.2 trillion marks a 21 per cent surge compared to the current fiscal year’s target of Rs7.5 trillion.

Notably, if implemented, the tax target for the upcoming financial year would be 29 per cent higher than the projected tax collection for the outgoing FY23. However, the brokerage house highlights the challenging nature of formulating a budget amidst stagflation and uncertainties surrounding the upcoming elections and Pakistan’s ability to bridge its external account funding gap.

The report emphasises the prevailing nervousness in currency, bond, and stock markets due to the uncertainty surrounding the financing of the US dollar funding gap. Furthermore, it states that revenue targets have historically deviated by an average of 8 per cent from the actual targets in the past five years, and a similar trend is expected in FY24 due to the economic slowdown.


The non-tax revenue target for FY24 is estimated at Rs2.5 trillion (2.4 per cent of GDP), compared to Rs1.6 trillion (2 per cent of GDP) for FY23. The report predicts several taxation measures, including tax on undistributed reserves, continuation of the super tax, a shift from the final tax regime to the minimum tax regime, asset/wealth tax, higher tax on non-filers, tax on rental income, and taxes on banks, tobacco, and beverages.

Regarding development spending, the Federal Public Sector Development Programme (PSDP) is projected to amount to Rs0.9 trillion for FY24. However, due to fiscal constraints, significant cuts are expected in this area. The consolidated PSDP (federal and provincial) is anticipated to reach Rs2.6 trillion (2.5 per cent of GDP) in FY24.

With the Pakistan Tehreek-e-Insaf (PTI) party being sidelined, there is a possibility of a weak coalition government coming to power in the upcoming elections. The report highlights the importance of an aggressive and competent new setup to tackle the ongoing economic crisis.

To create a favorable perception, the government may set unrealistic revenue targets in order to allocate more spending in the budget. The report suggests that it is unlikely for the government to complete the current International Monetary Fund (IMF) program on time and urges Pakistan to enter another, potentially larger, IMF program.

In light of the economic slowdown and high inflation, the government may introduce expansionary policies in the budget to appease the public, such as direct cash subsidies for the underprivileged and an increase in minimum wages. However, the brokerage firm warns against excessive spending without substantial tax collection measures.

In terms of its impact on the stock market, the upcoming budget is expected to be neutral to positive. Sectors such as oil and gas exploration, chemicals, pharmaceuticals, consumers, tobacco, technology and communication, textile, cement, fertilizers, and oil marketing companies may experience a neutral effect. Conversely, the budget might have a neutral to negative impact on banks and autos, while steel and independent power producers could experience a neutral to positive effect, according to the research.

As the budget is unveiled, stakeholders and citizens alike will closely monitor the government’s strategies to address the economic challenges and promote stability and growth in Pakistan.