The government of Pakistan gears up to present the federal budget 2024-2025
Islamabad: The government sets to present its first federal budget for the fiscal year 20224-25 today, navigating complex financial jargon is essential for grasping the new finance bill. This guide demystifies key economic terms to help you make sense of the latest budget proposals amid ongoing talks with the IMF.
Essential Budget Terms
- GDP (Gross Domestic Product): The total value of goods and services produced within the country during a specific period.
- PSDP (Public Sector Development Programme): Government’s initiative to boost private investment by developing human capital and infrastructure, aligned with long-term development goals.
- Revenue: Funds collected by the government, including:
- Tax Revenue: Income from taxes on earnings, goods, and services.
- Non-Tax Revenue: Income from non-tax sources like dividends and royalties.
- Expenditure: Government spending is categorized into:
- Capital Expenditure: Long-term investment in assets, reducing liabilities.
- Revenue Expenditure: Short-term operational costs within the fiscal year.
- Fiscal Deficit: The gap when government spending exceeds its revenue.
- Financing: Securing funds for business operations or investments.
- Budget Deficit: A financial situation where expenses surpass revenue.
- Debt-to-GDP Ratio: A measure of a country’s debt compared to its GDP.
- Subsidies: Government benefits are provided to the public through direct payments or tax relief.
- Debt Service: Funds required for repaying interest and principal on debt.
- Tax-to-GDP Ratio: Indicator of tax revenue about the size of the economy.