Page 8 - TEXtalks International May/June 2022

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Pakistan’s upcoming budget 2022-23 and

expectations of the textile sector

The Fiscal Year 2021-2022 is in its last days when on June 10, 2022, this Government will be
giving the next 2022-2023 Federal Budget for Pakistan. The year 2021-2022 was interesting for
Pakistan concerning the domestic and international political situations and had a serious impact
on the economy of the country. For one, the Federal Budget 2021-2022, given by the PTI govern-
ment of Prime Minister Imran Khan, was industrial friendly but it is about to end. The previous
and current prime ministers have different views about how the economy should be run and are
not inclined favorably towards each other personally, politically, and professionally. The textile
sector is curious about the upcoming budget.

When the outgoing budget was given, the country and the world were coming out of the COV-
ID-19 situation and had a dismal Pakistan GDP growth rate of minus 0.4%, while now in May
2022 it has been recognized by the international financial organizations that the economy not
only came out of its recession but also had shown a robust 6.0% GDP growth, mainly due to
amnesty given to the construction industry and incentives that were given to textile and other
exporting industry that reversed the recessionary trends in the economy, although other sectors
remained fragile for the outgoing fiscal period. Despite an increase in exports of textiles and IT
related services, in May 2022 the trade deficit of Pakistan had reached almost US Dollar 40
billion while the Balance of Payments deficit had narrowed to US dollars 0.62 billion due to the
inflow of remittances from overseas Pakistanis as well as because of a recent ban on import of
luxury items into the country.

All Pakistan Textile Mills Association (APTMA) is looking forward to the upcoming budget. They
have written a letter to the PM for support that will help increase textile exports to $26 billion in
the next fiscal year and $50 billion in the next five years. The textile industry is looking for the
restoration of zero-rating status, duty-free import of cotton, a continuation of regional competitive
energy tariff (RCET), and an extension of the Long Term Financing Facility (LTFF) scheme for the
entire value chain in the upcoming fiscal year. A 20 pages budget proposal sent to the ministry
of commerce unraveled 21 budgetary proposals for the next financial year of 2022-23 termed
them vital for sustainable growth of the textile industry and export target of $30 billion by 2025.
APTMA is also asking for a cut in corporate tax to 25% from 29% and a withdrawal of 1.5%
turnover tax. The textile Industry also proposed a zero present duty structure on dyes and
chemicals. APTMA also proposed that import duty on spare parts for power plants should also
be zero arguing that 100% of the textile industry is on self-generation of electricity.

May/June 2022