Investor Presentaiton

Chapter III - Estimates of Expenditure Drivers of Public Sector Expenditures As COVID-19 pandemic hit Pakistan towards the end of the third quarter of Financial Year 2019-20, it had a proverbial hard-to-predict Black Swan impact on fiscal management. The consequential imposition of lockdown and social distancing controls caused economic slowdown that cannot be measured easily in Pakistan but the magnitude of impact was obviously very high, calling for immediate fiscal rearrangements. Revenues sloped downwards to a near collapse. Development spending received a similar shock. All public expenditure objectives had to be shelved at least temporarily. At the same time, needs for social sector spending surged. Government of Punjab responded immediately and the PKR25.22 billion COVID-19 package included, in addition to the PKR18.000 billion tax relief, increased expenditure on healthcare facilities, preventive and curative measures and Social Protection Package to offset the unemployment effect. Chief Minister's Insaf Imdad Programme 2020 for targeted monetary relief to the unemployed population segments, was launched with a total outlay of PKR10.000 billion, PKR1.000 billion was earmarked for disaster relief response and PKR2.600 billion was transferred directly to the lowest District tier for relief measures. COVID-19 and its economic and social fallout overshadowed the contemporaneously lurking locust infestation peril that directly threatens Food Security. Pakistan, being a predominantly agricultural economy, stands to be massively hit by the menace. As an emergency response measure, Government of Punjab acted swiftly and allocated PKR500.000 million for locust control, in addition to the budget for disaster relief measures. Budgetary outlays for Financial Year 2020-21 had to be formulated against the backdrop of these occurrences. Sources of Revenue receipts were difficult to predict and may dwindle substantially as uncertainty around COVID prevalence grows. Expenditure on Health sector and allied services can be expected to mount. Social Protection services shall require increased and targeted focus. Public Works program for employment generation is being promoted as an effective tool and will receive additional funds. It also coincides with Federal priority program of provision of low cost housing to public as well as a boost to construction sector in general. In order to safeguard output from the Non- Development and Development expenditures on production sectors, the threat of locust has to be averted. In the midst of these crises, essential expenditures cannot be curtailed and non-essential spending requires implementation of stringent austerity measures to achieve fiscal balance. Expenditures Overview Public spending holds critical significance in Pakistan's economy. In general, objectives of Government expenditure are to maximize public welfare through provision of Public Goods, investment in social sectors like Health and Education for improvement in labour productivity, provision of subsidies wherever necessary, equitable redistribution of income and increase in aggregate demand. Despite massive resource constraints consequent to the pandemic COVID-19, Government of Punjab has made strenuous efforts to ensure that spending in key areas is not compromised and the benefits of expenditure reach all segments of society. Development expenditure had to take a hit and is decreased due to serious resource constraints. Current Expenditure Major Components of Government Expenditure Enables Government to maintain the current level of service delivery Development Expenditure Enhances capacity of Government to provide services to citizens Capital Expenditure Consists of Loans made, Loans repaid, and Contributions made to separate funds for meeting Long-Term Liabilities, such as Pensions Page 19

View entire presentation