November 01, 2007	Thursday	Shawwal 19, 1428

PESHAWAR, Oct 31: Government departments and agencies are planning to increase their budgetary expenditures to 6.2 per cent from the existing 5.63 per cent of the GDP by the fiscal year 2008-09 to overcome growing poverty in the country.

Targets to achieve the goal have been made part of the second Poverty Reduction Strategy Paper (PRSP-II), which is being currently finalised by the federal government in consultation with the provinces, official sources said.

The PRSP, first launched in 2001, is regarded as a comprehensive economic strategy document of the government for socio-economic development of the country.

The government has claimed that the policy framework incorporated in the first PRSP had contributed to significant reduction in the overall poverty ratio from 34.5 per cent in 2001 to 23.9 per cent in 2004-05.

Budgetary spending on initiatives identified in the first phase of the PRSP amounted to Rs434.6 billion in 2005-06, while cumulative PRSP expenditures during 2001-06 stood at Rs1,441 billion, with the budgetary expenditures averaging 4.7 per cent of the GDP during these five years. This helped lifting approximately 13 million people out of poverty, the sources said.

The draft second generation poverty reduction strategy, a copy of which is available to Dawn, is also focusing on keeping consistency in pro-poor budgetary and non-budgetary expenditures in the next four years.

According to the draft PRSP-II, the government has identified 17 different pro-poor sectors overall expenditures from the public exchequer would increase from Rs434.6 billion or 5.63 per cent of the GDP to 6.2 per cent by 2008-09.

Under the strategy, expenditures will be prioritised through a Medium-Term Expenditure Framework which will be in line with the Fiscal Responsibility and Debt Limitation Act, 2005.

The act stipulates that expenditures on the social sector will be 4.5 per cent of the GDP in any given year and the allocation for health and education will double over the next 10 years.

The macroeconomic framework for the PRSP-II, the draft said, had been prepared with a view to sustaining the growth momentum in a stable environment as it projected a growth of 7.2-7.5 per cent in the next four years.

This will be supported by strong growth in agriculture, manufacturing and services sectors.

To achieve the growth of 7.2-7.5 per cent in the next four years, the overall investment is projected to move in the range of 21-28 per cent of the GDP, with private sector investment taking the lead and public investment focusing on human and infrastructural development.

National savings as percentage of the GDP have been targeted at 17-19.4 per cent during the same period, subsequently projecting a current account deficit in the range of 3.4-4 per cent of the GDP.

The macroeconomic stability, the draft said, was vital for achieving the growth target in the next four years as overall budget deficit was targeted to be reduced from the current 4.2 per cent to 3.3 per cent of the GDP by 2010-11.