KARACHI: The government is likely to set an ambitious revenue collection target for budget 2020/2021 with less focus on documentation of economy in order to promote business.
According to Budget 2020/2021 preview released by Topline Securities on Thursday, the government is expected to announce the Federal Budget for FY21 on June 12, 2020.
The budget is likely to take into account the implications of COVID-19 outbreak, where it will try to ease the pain of the masses due to the pandemic by focusing on job creations and relief for the businesses.
The analysts at Topline Securities expect IMF to show some leniency with the government in setting targets for next year, taking into account the impact of COVID-19 outbreak.
The key challenge for the govt. will be restricting the fiscal deficit for the upcoming year as not only the govt. will have to factor in higher expenditures relating to COVID-19 outbreak, but also take hit on revenues because of the slowdown in overall economy.
The government is already facing the prospect of registering a huge fiscal deficit of 8.0-9.0 percent of GDP in FY20 (primary deficit 3-4 percent).
They believe the government will try to restrict the fiscal deficit in the budget to 8.5-9.0 percent of GDP for FY21 (6.5-7.0 percent excluding COVID-19 expenses), where expenditures relating to COVID-19 are likely to be marked separately.
Recall that IMF had agreed to not include the expenses incurred on combating COVID-19 as part of budget deficit for FY20.
They believe the same relief can be extended for 2020/2021 as well.
They said the government is likely to earmark Rs1 trillion for dealing with COVID-19 pandemic and for providing relief to the business community.