ISLAMABAD (PTI): Pakistan on Wednesday announced a nearly 15 per cent hike in its defence spending and allocated Rs 2,122 billion in the 2024-25 budget, marking a significant increase from last year amidst strenuous efforts to secure a fresh loan from the IMF to meet the cash-strapped nation's external liabilities.

Finance Minister Muhammad Aurangzeb presented the budget in the National Assembly, the lower house of parliament, the first budget of the Pakistan Muslim League (Nawaz) (PML-N) and Pakistan Peoples Party (PPP) coalition government which came to power after the February 8 general elections.

Last year, the government allocated Rs 1,804 billion for defence, which was higher than the Rs 1,523 billion allocated the previous year.

Aurangzeb said the government set a 3.6 per cent GDP growth target for the next year -- higher than the 3.5 per cent set for the outgoing year. The country however missed that target and could only achieve 2.38 per cent growth.

He said the total volume of the budget would be Rs 18,877 billion and announced a Rs 2,122 billion allocation for defence spending, reflecting a 14.98 per cent increase.

Over Rs 1,804 billion was budgeted for the fiscal year 2023-24, ending on June 30. The defence sector expenses are the second biggest component of the annual expenditure after the debt payments, which for the next year would be Rs 9,700 billion and constitute the single biggest expense of the debt-trapped country, which is dependent on loans from friendly nations like China.

He said the inflation target for the next fiscal year would be 12 per cent while the budget deficit would be 6.9 per cent of the GDP.

The minister said the tax collection target would be Rs 12,970 billion -- 38 per cent higher than the previous year.

He said the non-tax revenue target of the government would be Rs 3,587 billion against Rs 2,963 billion set for the previous year.

The government also decided to provide a historic Rs 1,500 billion Public Sector Development Programme (PSDP) at the federal level and by adding the provincial component of the development budget, the net PSDP comes to a whopping Rs 3,797 billion.

The minister said the economic crisis had ended and the government fast-tracked the development process by offering new opportunities. He also announced plans to speed up the privatisation of loss-making state-owned entities as well as outsource various airports.

The opposition Pakistan Tehreek-e-Insaf (PTI) lawmakers protested during the budget speech by raising slogans against the government. They alleged that the government was not legitimate as it came to power through fraud in the elections.

After the budget speech, the session was adjourned.

As per the government’s tentative plan, a general debate on the budget would start on June 20 and would continue till June 24.

The members will take part in the debate and vote on cut motions on June 26 and 27 whereas the budget will be passed on June 28.

The new budget presentation comes as the government is trying to get another loan from the International Monetary Fund (IMF) and several of its pre-conditions, including the revenue targets, have been already accepted and included in the budget estimates.

There is growing consensus among experts that without a fresh bailout package from the IMF, Pakistan would find it almost impossible to meet its external obligations.

Earlier, according to an Associated Press of Pakistan report, the budget was prepared while considering the existing challenges being faced by the economy on domestic and international fronts.

Hence, mitigating people’s sufferings, transforming the agriculture sector, promoting Information Technology (IT), boosting exports, promoting industrial growth and bolstering businesses, would be the main focus of the document, it reported quoting sources.

The APP also said the government is firmly committed to presenting a pro-people, business-friendly and progressive Federal Budget FY 2024-25 and would pursue policies aimed at fiscal consolidation to contain the budget deficit.

In addition to fiscal management, revenue mobilisation, measures for economic stabilisation and growth, reduction in non-development expenditures, job creation and people-friendly policies for the socioeconomic prosperity of the country would feature in the budget.

It would also focus on social sector development besides introducing reforms for improving governance and boosting the private sector for investment.

On the revenue side, the government would introduce measures for bringing improvements in the system of tax collection, broadening the tax base, and facilitating tax-payers.

Keeping in view the robust growth of revenues during the current fiscal year (2023-24), the government is likely to set the revenue collection target at over Rs 12 billion for the fiscal year 2024-25.