Pakistan’s federal budget offers mixed incentives for the cement industry

On 12 June Pakistan’s Finance Minister, Muhammad Aurangzeb, presented a budget proposal of PKR18.8776trn (US$67.8bn) for FY24-25. The proposal features a record-high deficit of PKR8.5trn, broadly perceived to align with the International Monetary Fund (IMF) guidelines. 

The cement industry has not yet released any comments on the budget or its lack of considerable incentives for the cement industry.The industry’s sentiments were impacted when the government proposed increasing the federal excise duty (FED) on cement from PKR2/kg to PKR3/kg, increasing cement bag prices by PKR50/bag. However, a significant amount for development projects is expected to temper the industry’s negative sentiments. 

Record development outlay targeted
The government has set the Federal Public Sector Development Programme (PSDP) at a record PKR1.5trn, including PKR100bn for public-private partnerships projects, a 101 per cent increase from the revised FY23-24 budget. Despite fiscal constraints, this significant increase in the development outlay underscores the government’s unwavering commitment to enhancing infrastructure and addressing challenges in transportation, energy, and water resources. With 81 per cent of the allocation towards existing projects, the government’s focus on infrastructure development is a cause for optimism about the country’s economic growth.

A local research house said that significant hikes in PSDP allocation and a focus on dams and canals bode well for the cement and steel sectors, which have been grappling with weak demand.