Budget outlay to touch Rs1.5tr: Relief for govt employees, pensioners expected
By Our Correspondent
ISLAMABAD, May 30: The size of the national economy is estimated to grow to a figure of Rs8.8 trillion (about $145 billion) next year and the total budget expenditure will rise to Rs1.5 trillion against the current year’s outlay of Rs1.098 trillion.
Dr Salman Shah, adviser to the prime minister on finance, said at a joint press conference with Minister of State for Finance Omar Ayub Khan that next year’s GDP growth rate target had been put at seven per cent and fiscal deficit at 4.2 per cent of the GDP.
As such, the fiscal deficit would stand at about Rs370 billion in absolute terms and the defence budget would amount to about Rs310 billion, a senior official told Dawn.
Dr Shah said that pensioners would be provided relief in the budget and older pensioners would get greater relief. Similarly, he said, government employees would also be given suitable respite.
Mr Omar Ayub said a subsidy of about Rs100 billion for electricity and fertiliser, etc, would be continued in the next budget and low-income groups would be given price stability through production and supply side improvement.
Since national security is the government’s top priority, Mr Shah said, maximum funds will be provided for modernisation of the armed forces. However, the same will be done within available resources.
To ward off regional eventualities, he said, “100 per cent defence preparedness” is a must for Pakistan. “This programme of modernisation will be financed through a multi-year programme,” he added.
An official said given the ongoing anti-terror activities on the eastern borders and any possible eventuality on the western border, the defence requirements would be met whatever the financial cost.
The official explained that the forces would be equipped with a “force multiplier system” to give them a cutting edge.
For this purpose, the government’s priority list included Awacs aircraft from Sweden and F-16s from Washington for the air force and submarines, frigates and other surface ships for the navy.
Mr Omar Ayub said that the provinces would get Rs51 billion higher that the current year as proceeds from the federal divisible pool under the interim National Finance Commission (NFC) award announced by the president.
The focus of next year’s budget, according to Mr Shah, would be removal of infrastructure, energy, communication and human resource constraints for employment generation, skill creation and reduction in cost of doing business.
For the first time, the two finance managers conceded that poverty had been 34.2 per cent for about two years but hastened to add that it had gone down to 25.6 per cent now.
In response to a series of questions on cartelisation and rise in prices of edible goods, Mr Shah said relevant laws had not provided enough room for action against cartelisation of cement, sugar and edible items and defended the government measures for taking supply side measures.
He also hinted at providing incentives for dairy and livestock sectors for value addition and public sector development programme allocation for water related projects as an incentive to improve agriculture output and providing subsidies for fertilisers and other inputs.
In response to questions on oil pricing, Mr Shah said the finance ministry’s role was limited to projecting revenue and expenditure forecasts, but any flaw in the price fixation mechanism was the petroleum ministry’s responsibility.
He conceded that tax-to-GDP ratio was very low in Pakistan and would be increased by bringing in every segment of society into the tax net.
