RECORDER REPORT

KARACHI: The budget 2019-20 will most likely be presented on the terms and conditions of the International Monetary Fund (IMF) to bring the economy back on track and will likely focus on fiscal discipline, analysts said.

They believed that the upcoming budget will not bring any major excitement for the stock market. Rather it will be negative, especially for cyclical sectors (cement and steel), fertilizer and chemical if key measures like continuation of corporate tax rate at 29 percent, re-imposition of super tax for non-financial companies, increase in excise, GST and turnover taxes among others are implemented, an analyst at Topline Securities said.

He said higher tax revenue of 3.5 percent of GDP (to the tune of Rs 1.4-1.5 trillion) would be key highlights of the budget. However, he was of the view that government may not be able to achieve the budgeted revenue targets given continued economic slowdown.

“We believe, that in order to bring the fiscal deficit to 5.5-6.0 percent, the government will likely cut development expenditure to Rs 1.2-1.3 trillion from FY20 budgeted amount of Rs 1.8 trillion,” he said. “Further, we may also see downward revision in other current expenditures like subsidies, and social safety programme along with obtaining surplus from provinces (mainly Punjab and KPK),” he added.

He said incremental tax measures can include increase in GST by 1 percent to 18 percent across the board, increase in FED on select items, hike in additional custom duties, increase in regulatory duties on imports of consumer discretionary items, uniform taxation for petroleum products and revenues from amnesty scheme among others.