ISLAMABAD, May 26: Finance Minister Shaukat Aziz on Monday said 90 per cent of the Public Sector Development Programme allocation of Rs134 billion has been utilized during 2002-03, .
He was addressing the first ever training workshop for members of the parliament in the federal budget process organized by Pakistan Institute of Legislative Development and Transparency (PILDAT).
Asserting that this was the highest ever utilization, he hinted at the reasons for the gap between target and achievement, namely, delays in release of funds by the Finance Ministry which has made it a policy to provide budgetary allocations on quarterly basis and that too belatedly. The last quarter allocation is often not released at all, creating serious distortions in implementation.
From next year, the Minister stated, 45 per cent of development funds would be released to the line departments in July. Depending on utilization, the remaining allocation would be released in January. While the proportion of non-development funds to be released in July, would be 40pc.
Pakistan, he said, now stood at the crossroads where “if we go in the right direction no power on earth can prevent us from becoming Asian tigers, while wrong policies could derail the achievements of the past three years.”
Criticism “is most welcome”, but all the politicians had to decide whether Pakistan was to retrieve economic sovereignty which would also impact national defence, he told the legislators. During this period, Pakistan had reduced the ratio of debt service from 65pc in 1999 to 44pc in the current financial year. The Minister envisioned its further reduction to 30pc in the next 3-4 years.
Those who did not want this reduction were in fact against Pakistan becoming stable and dispensing with dependency, he remarked in obvious reference to the oft-repeated charge that the government was a blind follower of foreign agencies’ dictates.
It had crystallised during recent meeting of Pakistan Development Forum that government of Pakistan was the owner of its policies, he said. Indeed, the ‘donor’ agencies too had played a part in their formulation. Being recipient of their loan, this was inescapable because, he added.
He said the government was determined to reduce poverty by 25pc in the next 4-5 years which, however, was impossible through gimmicks. Thus he had spurned the proposal given in 2000 to reduce the wheat price by Re1 per kg which would have required the outlay of Rs26 billion. Instead, the wheat trade was deregulated, and now there was no shortage of wheat flour in any part of the country.
Cautioning the legislators against borrowing for consumption, he advised them to be careful to see that (1) the fiscal deficit did not increase which now stood at 4.6pc as against 7pc of 3 years back and against current account deficit which for the second consecutive year had turned into surplus of $3 billion after a long time.
He said development and investment, in addition to GDP growth, were other preconditions of decline in poverty. Thus it was proposed to increase PSDP allocation by 20pc in 2003-04, while steps were being taken to encourage private sector investment.
In this context, he referred to 20-30pc increase in output of car industry to the benefit
of 120,000 people employed in it.
Fillip to consumer credit was another factor which had been stimulated by sharp fall in interest rates, Aziz asserted. The government, moreover, would further reduce import duties on smuggling-prone items for protecting local industry, Aziz stated.
Responding further to criticism by legislators among his audience, he asserted that dollar would have been worth Rs100, and petroleum and electricity 40-50pc dearer had Pakistan not built up foreign currency reserves beyond the $10 billion mark.
He hoped that the banks would improve their performance to encourage remittances by overseas Pakistan.
The Finance Minister further argued that government did not gain anything from increase in oil prices, because it had fixed a revenue of Rs 45 billion under Petroleum Development Levy (PDL).
He also contradicted the report that CBR had issued a new Income Tax form which was 20 pages long. No new form had been released as yet, he said, adding that the form introduced two years ago would be issued again, albeit with certain material changes required for reconciling to computer requirements.
