Finance Minister announces salary, pension increases in Budget 2024-25

ISLAMABAD: Finance Minister Muhammad Aurangzeb presented the federal budget for 2024-25 in the National Assembly on Wednesday, as the government seeks to secure a long-term International Monetary Fund (IMF) bailout.

The budget session, chaired by Speaker Ayaz Sadiq, was also attended by Prime Minister Shehbaz Sharif.

The government has proposed significant financial relief for employees to address the impact of inflation. The budget includes a 25 per cent salary increase for employees in Grades 1 to 16 and a 20 per cent increase for officers in Grades 17 to 22.

Additionally, a 15 per cent rise in pensions for retired employees and an increase in the minimum monthly wage from Rs32,000 to Rs37,000 were announced, acknowledging the financial hardships faced by government workers.

Finance Minister Aurangzeb highlighted that inflation has decreased to 12 per cent, and the Pakistani rupee has shown stability against the US dollar, despite a 10 per cent decline. He emphasized the government’s top priority of reducing inflation, noting that it had reached 38 per cent a year ago, with food inflation at 48 per cent.

“I am happy to report that inflation has come down significantly due to our improved economic strategy,” Aurangzeb stated. He cited the Consumer Price Index for May 2024 at 11.8 per cent and food inflation at 2.2 per cent, underscoring the government’s commitment to achieving single-digit inflation.

Aurangzeb acknowledged Pakistan’s low Tax-to-GDP ratio and stressed the importance of tax reform for economic success. He mentioned ongoing multidisciplinary initiatives within the Federal Board of Revenue (FBR) to expand the tax net without overburdening current taxpayers. Prime Minister Sharif is closely monitoring these reforms, focusing on liberalization, tax policy, and administrative changes.

The 2024-25 budget aims to balance people-friendly measures with IMF requirements. The federal government has set a GDP growth target of 3.6 per cent for the fiscal year, a modest but realistic goal outlined in the budget documents.

Analysts anticipate that the government will set ambitious fiscal targets to strengthen its case for a new IMF bailout deal. The measures announced reflect a strategic approach to addressing economic challenges while seeking to ensure long-term financial stability for Pakistan.

Read next: PSX closes in green after seven days