# *Detailed SUMMARY of the article "Budgeting on sacrifice" by Khurram Husain, Published in Dawn on June 5th, 2025:* The article analyzes *Pakistan's upcoming budget* amid *IMF constraints* and economic challenges, revealing that the government faces difficult choices with limited fiscal space. The expected *FBR revenue target* is around *Rs14 trillion*, with *current expenditures* staying below *Rs23 trillion* (*Rs16 trillion federal*, rest provincial), and the *underlying primary balance* must remain near *Rs1.17 trillion* as per the *medium-term framework* with the *IMF*. *Defense spending* is set to increase by *13.7%* according to the framework, though actual increases may be higher following recent conflict and increased *security requirements*. *Development spending* faces cuts, with the *federal development programme* targeted at *Rs1 trillion* for next year, while *Planning Minister Ahsan Iqbal* has urged provinces to announce smaller programs, though compliance is unlikely. The *salaried class* has borne the heaviest tax burden, paying an additional *Rs182 billion* in taxes this year - representing almost *50% growth* in collections from salaried individuals who simultaneously faced *income stagnation* and *ferocious inflation*. This *predatory taxation* on *compliant taxpayers* has become a serious economic drag alongside *rising energy costs*, *poor trade regime*, *policy inconsistency*, and *lack of contract sanctity*. The author warns that any *relief for real estate speculators* without *credible efforts* to broaden the *tax base* would signal government weakness and lack of seriousness about *trade reform* and *export promotion*. Despite planned *trade liberalization*, without addressing the growing burden on *compliant taxpayers*, the government would merely be *ticking boxes* rather than implementing genuine reform. The article emphasizes a rare *moment of opportunity* where the economy has *stabilized* - *inflation* is controlled, *deficits bridged*, *exchange rate stable*, and *foreign reserves* increasing, with the government enjoying *establishment backing* and *no significant opposition*. However, these conditions came through massive *citizen sacrifices* - *trampled freedoms*, *burned incomes*, and appropriation of wealth to bridge *yawning deficits*. The author demands that something transformative emerge from these sacrifices, highlighting Pakistan's extremely *narrow revenue base*, *power sector* generating more *circular debt* than electricity, and *SOEs* with losses comparable to *large infrastructure projects*. The government must achieve at least one breakthrough against these *monuments to failed governance*, starting with the upcoming budget. # *Easy/Short SUMMARY*: *Pakistan's budget* faces *IMF constraints* with *Rs14 trillion revenue target* and *Rs23 trillion expenditures*. *Defense spending* rises *13.7%* while *development spending* gets cut to *Rs1 trillion*. *Salaried class* paid extra *Rs182 billion* (*50% increase*) amid *income stagnation* and *inflation*. Despite economic *stabilization* and government having *establishment support* with *no opposition*, citizens made huge *sacrifices* and deserve *transformative breakthroughs* to address Pakistan's *narrow tax base* and *governance failures*. # *SOLUTIONS of The Problem*: ## *1. Broaden Tax Base* Implement *comprehensive tax reforms* to include *real estate*, *agriculture*, and *retail sectors* in the tax net. ## *2. Reduce Salaried Class Burden* Provide immediate *tax relief* to *salaried individuals* who face *50% tax increase* and *income stagnation*. ## *3. Increase Provincial Cooperation* Establish *federal-provincial coordination* mechanism to align *development spending* with *fiscal targets*. ## *4. Reform SOE Sector* Implement *privatization* or *restructuring* of *loss-making state enterprises* to reduce fiscal burden. ## *5. Address Circular Debt* Introduce *power sector reforms* to eliminate *circular debt generation* and improve electricity efficiency. ## *6. Enhance Revenue Administration* Strengthen *FBR capacity* through *digitization*, *automation*, and *compliance monitoring systems*. ## *7. Implement Progressive Taxation* Introduce *wealth taxes* and *capital gains taxes* to ensure *equitable burden distribution*. ## *8. Promote Export-Led Growth* Combine *trade liberalization* with *export incentives* and *industrial policy reforms*. ## *9. Strengthen Contract Sanctity* Establish *independent regulatory bodies* and *commercial courts* to ensure *contract enforcement*. ## *10. Create Fiscal Space* Reduce *non-productive expenditures* and *subsidies* to create room for *development spending*. # *IMPORTANT Facts and Figures Given in the article*: - Expected *FBR revenue target* around *Rs14 trillion*. - *Current expenditures* to stay below *Rs23 trillion*. - *Federal expenditures* around *Rs16 trillion*, rest from provinces. - *Underlying primary balance* must remain near *Rs1.17 trillion*. - *Defense spending* to increase by *13.7%*. - *Federal development programme* targeted at *Rs1 trillion*. - Until March, only *Rs309 billion* spent on federal development. - Provinces have spent over *Rs1.2 trillion* on development. - *Salaried class* paid additional *Rs182 billion* in taxes this year. - Tax collections from salaried people grew almost *50%*. # *IMPORTANT Facts and Figures out of the article*: - *Pakistan's tax-to-GDP ratio* is *8.6%* vs regional average of *15%* (*World Bank*, 2024). - Only *3 million* out of *220 million* Pakistanis pay *income tax* (*FBR*, 2024). - *Circular debt* in power sector reached *Rs2.4 trillion* (*NEPRA*, 2024). - *SOE losses* total *Rs1.5 trillion* annually (*Finance Ministry*, 2024). - *Development spending* as % of GDP is *2.1%* vs required *7%* (*Planning Commission*, 2024). - *Real estate* contributes less than *0.2%* to total tax revenue (*IMF*, 2024). # *MCQs from the Article*: ### 1. *What is the expected FBR revenue target for the upcoming budget?* A. Rs12 trillion B. Rs13 trillion *C. Around Rs14 trillion* D. Rs15 trillion ### 2. *By what percentage is defense spending supposed to increase?* A. 10.5% B. 12.3% *C. 13.7%* D. 15.2% ### 3. *How much additional tax did the salaried class pay this year?* A. Rs150 billion B. Rs165 billion *C. Rs182 billion* D. Rs200 billion ### 4. *What was the growth rate in tax collections from salaried people?* A. 40% B. 45% *C. Almost 50%* D. 55% ### 5. *How much was spent on federal development until March?* A. Rs250 billion B. Rs280 billion *C. Rs309 billion* D. Rs350 billion # *VOCABULARY*: 1. *Fiscal* (مالی) – Related to government revenue and expenditure 2. *Primary balance* (بنیادی توازن) – Budget balance excluding interest payments 3. *Medium-term* (درمیانی مدت) – Relating to intermediate time period 4. *Framework* (ڈھانچہ) – Basic structure or set of rules 5. *Expenditures* (اخراجات) – Money spent or costs incurred 6. *Implored* (منت کی) – Pleaded or begged earnestly 7. *Oblige* (احسان) – Do a favor or comply with request 8. *Starve* (بھوکا رکھنا) – Deprive of necessary resources 9. *Nordic* (شمالی یورپی) – Relating to Scandinavian countries 10. *Incremental* (اضافی) – Additional or increasing gradually 11. *Magnitude* (وسعت) – Great size or extent of something 12. *Stagnate* (رک جانا) – Remain static or fail to develop 13. *Obliterated* (تباہ) – Destroyed completely or wiped out 14. *Ferocious* (خونخوار) – Extremely fierce or violent 15. *Predatory* (شکاری) – Seeking to exploit or oppress others 16. *Compliant* (فرمانبردار) – Conforming to rules or standards 17. *Sanctity* (تقدس) – Ultimate importance and inviolability 18. *Speculators* (سٹہ باز) – People who trade for quick profits 19. *Invocations* (دعائیں) – Calling upon or appealing to something 20. *Pirouette* (باؤٹیٹ) – Ballet spin on one foot 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. Please be reminded not to remove the attribution label affixed to this article. It is crucial to acknowledge the source and the effort invested in creating this summary. We discourage any unauthorized distribution without proper credit. Thank you for your understanding and cooperation. 🔍 ⚡ *Explore More Summaries, Solutions, and Vocabulary Meanings* 💡 Join our WhatsApp Channel for timely and comprehensive summaries of the latest articles, along with well-crafted solutions and helpful vocabulary meanings. Click the link below to join now 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) --- *dawn.com* *Budgeting on sacrifice* *Khurram Husain* *6–7 minutes* WE are days away from the budget now and its details are still being worked out. Here is some of what we know thus far. They are likely to announce an FBR revenue target around Rs14 trillion (maybe slightly higher). Current expenditures are supposed to stay just below Rs23tr, of which around Rs16tr are federal and the rest from the provinces. The underlying primary balance (deficit plus interest expenditures) must remain somewhere near Rs1.17tr. These numbers will be more or less fixed since they are part of the medium-term framework already worked out with the IMF and released in the last staff report. Whatever space will need to be made for shifting tax and expenditure priorities must be created in a way that does not change these numbers by too much. Now consider what they will have to do in the budget. First up, defence spending is supposed to increase by around 13.7 per cent, as per the same medium-term framework, which was drawn up before the recent conflict. We will see how much of an increase actually comes now that the resource requirements of the security forces have undoubtedly increased following the war. Usually the first place to see cuts is development spending. In the current year, for example, development spending was supposed to be less than Rs1tr as per the understanding with the IMF, but the government still announced a federal development programme spending target of Rs1.4tr in its budget last year. But until March, barely Rs309 billion had been spent, while the provinces raced ahead and have spent more than Rs1.2tr already. For next year they are trying to keep the federal development programme down to Rs1tr again. Planning Minister Ahsan Iqbal has implored the provinces to cooperate with the centre and announce smaller development programmes for the next fiscal year. It is unlikely the provinces will oblige. And the federal government will have to starve its own plans, and its MNAs, in order to keep the fiscal equation more or less in control. Rarely have conditions been so favourable for a government to do something big and transformative. Along with demands for heightened defence spending will come demands for 'relief' from the citizenry, especially salaried individuals and businesses crushed under a Nordic tax burden. Probably the single largest growth in tax contribution this year has come from salaried individuals, as per figures reported in reputable news dailies. Consider a few numbers. One reported figure shows that by the time this fiscal year ends, the salaried class would have paid an additional Rs182bn in taxes compared to what it paid last year. Mind you, this is incremental tax, over and above what it paid last year. This would make for a growth rate of almost 50pc in collections from salaried people. Nobody else in the country has borne an incremental burden of this magnitude while seeing their income stagnate and its value be obliterated by the most ferocious inflationary fire this country has ever seen. This burden came right as that fire died down. Salaried people have seen predatory taxation and must be the first in line for relief in this budget. The rising burden on compliant taxpayers has turned into a very serious issue. It was always serious, but now it is probably one of the most important drags on the economy, along with rising energy costs, a poor trade regime, policy inconsistency and lack of sanctity of contracts and all the traditional items we place on this list. How can they expect growth to reach 4.2pc next fiscal year without wider burden-sharing in revenue collection? If there is any 'relief' for real estate speculators in the budget, we will know that this government is standing on legs of jelly. If there are no credible efforts to increase the base of taxation, we will know this government has surrendered without a fight. From what we hear, they are planning far-reaching trade liberalisation. If this step is not accompanied with credible fiscal measures to arrest the growth of the tax burden on compliant payers, we will know the government is not serious about any trade reform or promoting exports, as they claim. They are merely ticking boxes and fulfilling formalities and hiding behind pious-sounding invocations of change and reform. We have a moment of opportunity here. The economy has stabilised. The inflationary fire has been doused, the deficits bridged, the exchange rate is on an even keel and foreign exchange reserves are on an upward path. Beyond this, the government enjoys the backing of the powerful establishment and there is no opposition to speak of. Rarely have conditions been this favourable to do something big and transformative. A lot of sacrifices have been made to bring this about. Let's not mince words here. Our freedoms, our rights and even our votes have been trampled upon so that the government can enjoy calmer waters to operate in. Our incomes have been burned, and of what is left, a massive share has been appropriated in the name of bridging the yawning deficits that were taking us perilously close to total unviability. This is a lot of sacrifice for a common citizen to have to make. Now that it has all been done, the least we are owed in return is that something good should come out of it. Give us some sort of a breakthrough, somewhere. Currently, we have a revenue base so narrow that only a ballet dancer could pirouette on it. We have a power sector that generates circular debt more effectively than electricity. We have SOEs whose accumulated losses are comparable to the cost of a large infrastructure project. We are blessed with so many monuments to failed governance that this list gets truly impressive. Those ruling us should make at least one breakthrough against this list to vindicate themselves, and they can start with the upcoming budget. The writer is a business and economy journalist. Published in Dawn, June 5th, 2025