May 27, 2008	Tuesday	Jamadi-ul-Awwal 21, 1429

KARACHI, May 26: The government is determined to bring down revenue deficit to 6.5 per cent by the end of current fiscal year and take it further down in the next fiscal year by improving the tax collection and cutting the non-development expenditure, Federal Minister for Privatisation and Finance Naveed Qamar announced on Monday.

He hinted at increasing returns on saving schemes, floatation of long-term government bonds and other measures to reduce government’s dependence on bank borrowing. “The next budget will give relief to the poor and disadvantaged sections of the population,” he assured.

In another context Mr Naveed expressed confidence in overcoming acute electric energy crisis in the next few years as he informed that investment applications for 5,000 megawatt power projects had been received so far. The last date for giving applications is July 15. “We still focus on growth but with an equal attention on social side as well,” the minister responded to a question from a journalist after he emerged from a lengthy meeting with the members of the Overseas Investors’ Chamber of Commerce and Industry. “We have lined up $3 billion inflows before the end of current fiscal year,” he informed the journalists.In not so many words the minister outlined the future strategy to narrow down bulging external imbalance, contain revenue deficit, reduce government dependence on bank borrowing and address inflationary pressures by fiscal measures and also by improving governance and ensure supply of food grains.

“Restricting government borrowing within the limits prescribed by fiscal responsibility laws is top on our priority,” he declared. He pointed out the ultimate victims and sufferers of “government’s fiscal irresponsibility” are the people, who are now enduring backbreaking inflation.

Providing relief to people, he stressed, is the cornerstone of the government’s budgetary policy to be announced on June 7 next.

“These are difficult times and there seems to be an all pervading recession in the market,” the minister responded to a question. He said that all efforts were being made to revive confidence of the business and “we will be having a regular quarterly interaction with the OICCI”.

He said that the Economic Revival Council was another forum, which will be in touch with the government to give feedback of the market as well as guide the government in key areas.

Most of the questions asked to the minister in the press conference pertained to government’s appetite for bank borrowing, possibility of new taxation measures and the resources flow to provinces in context of the National Finance Commission.

Asked whether the government was considering withdrawal of tax exemption on capital gains from stock market transactions, the minister said whatever will be done will be after consultations with all the stakeholders.

“The June 7 budget speech will answer all of your questions,” Naveed Qamar replied to a volley of unending queries as to what could be the new sources of government revenue.

The minister reminded the OICCI members that it was his party’s policies in 1994 that attracted investment for increasing electric power generation. He said that the government was trying to engage rental power plants.

As for his discussions in the meeting with OICCI members, he said all business and economy issues were discussed that include the possible policy direction and concerns of investors and business in the current situation.

Rising food and oil prices are the challenges that have to be met by the government as well as the business.

Earlier the OICCI members in their meeting with the minister pleaded for enforcement of fiscal responsibility laws, a cut on non-development expenditure, widening of tax base to include un-taxed and under-taxed sectors, reduction of excessive taxation, cutting tariffs on items not manufactured locally and effective curb on smuggling and under-invoicing.

They stressed the need for continuation of fast-track privatisation in a transparent manner and ensure that its proceeds are used strictly for debt retirement and poverty reduction.

The OICCI members also called for increased expenditure on education and health with emphasis on vocational training, giving a boost to industrial and agricultural sectors and aggressively targeting foreign direct investment.

OICCI President Waqar Malik, in his welcome remarks, proposed setting up of an energy council with all stakeholders to suggest ways for checking the worsening energy situation in the country.

He also proposed for holding a joint investment conference late this year to attract shy foreign investors back to Pakistan.

The FDI, Mr Malik continued, is needed for fuelling economic growth, creating employment opportunities and for maintaining currency stability and help manage trade and current account deficits.