Here’s a guide to understanding the budget for 2024-25

7 min read

In an effort to secure the new bailout package for the country from the International Monetary Fund (IMF), the government announced on Wednesday that it will table the much-anticipated federal budget for fiscal year 2024-25 on Wednesday. 

Muhammad Aurangzeb, the Finance Minister of the country, will present the budget in the National Assembly at 4 p.m.

On the day before the budget was released, the government had said that the economy would grow at a rate of 2.4%, which was lower than the target of 3.5%, despite revenue being up by 30% over last year, and budget and current account deficits being controlled.

To help you better understand the contours of the finance bill, and to help you prepare for the upcoming unveiling of the government’s budget for 2024-25, here is a one-stop guide to all financial terms you may run across.

Economic output (GDP)

Generally, gross domestic product refers to the monetary and market value of all the manufactured goods and services produced within a country’s borders over a given period of time, regardless of where they were produced.

Iniative PSDP/3092

As an important public intervention in spurring private investment through the creation of human capital and the improvement of infrastructure, the Public Sector Development Programme (PSDP) is an important program developed by the public sector. The PSDP is aligned with the government’s long-term development goals, which can be seen as an effective way to achieve these goals.

Amount of revenue

There is a revenue budget that gives details on where the government’s revenue comes from and explains the sources of that revenue. Tax revenue and non-tax revenue can be further divided into two categories based on how they are collected.

  • As a result of many taxes imposed on goods and services, payroll taxes, tax levied on the transfer of ownership and transfer of property, and other taxes, there will always be a source of tax revenue – taxes on income and profits, social security contributions, taxes levied on goods and services.
  • There are two types of revenue – tax revenues and non-tax revenues. The first type of revenue is tax revenues based on government involvement in state-owned enterprises and is derived from sources other than taxes.

Budget expenditures

The term expenditure or spending in the context of government encompasses all government consumption, investment, and transfers. There are two types of expenditures in this category: capital expenditures and revenue expenditures.

  • In simple terms, capital expenditures are the costs associated with the creation of assets, which are basically long-term expenditures. Consequently, the government’s liabilities are reduced as a result of this activity. A non-recurring investment from this type of asset contributes to the capital stock of an economy and adds value to it.
  • An expenditure on revenue is one that is incurred in the current period or typically within a one-year period. It is considered a short-term expenditure.

Deficit in the fiscal budget

It refers to the difference between the income of a government and the expenditures of that government. Having a fiscal deficit is a sign that a government is spending more than it can afford.

Obtaining financing

There are many forms of financing, including lending funds, making investments, and making purchases for the purpose of conducting business activity.

Debt to GDP ratio

It has been shown that the financial health of a country can be determined by its budget deficit, which is a situation in which expenses exceed revenues.

Ratio of debt-to-GDP

It is a metric used to compare the amount of public debt a country owes in relation to its gross domestic product (GDP).

Financial assistance

An indirect subsidy, also known as a government subsidy, is a benefit given by the government to its citizens. A direct payment (such as a cash payment) can be provided as well as an indirect payment (such as a tax exemption).

Services related to debt collection

Generally speaking, debt service is the amount of cash required for a period of time in order to repay the principal on a debt as well as the interest that has accrued on the debt

Taxes-to-GDP ratio

The tax-to-GDP ratio is a measure of how taxes are collected compared to the size of the economy of the nation, as measured by the gross domestic product of the country.

Timenews1 provided that information.

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