ISLAMABAD, June 1: The size of the budget for 2009-10 is likely to be increased by Rs210 billion to Rs2,900 billion.

Sources said here on Monday the increase was likely to “provide a slight cushion” to the government to carry out development projects and offer relief to the poor.

A finance ministry team, headed by Finance Secretary Salman Siddique, briefed the National Assembly’s Standing Committee on Finance headed by Fouzia Wahab on salient features of the budget on Monday.

The delay in reimbursement of funds for the war on terror by the United States may increase the budget deficit.

The size of the Public Sector Development Programme (PSDP) this year is likely to be about Rs670 billion, allowing the government to launch new projects, particularly for poverty alleviation.

The sources said that the government was likely to announce a 20 per cent increase in salary and pension of government employees. Finance ministry officials are reported to have told the committee that Rs54 billion would be allocated for displaced people, Rs7 billion for Baitul Maal and Rs70 billion for the Benazir Income Support Programme, “targeting the poor of the poorest”.”The budget deficit is likely to increase from 4.3 per cent this year to 5 per cent next year,” the secretary finance said while briefing parliamentarians on salient features of the next budget.

He said that the increase in deficit would result in an additional borrowing of Rs750 billion, increasing the debt liability of the government.

Analysts here said the increase in the budget deficit would erode gains achieved during the current fiscal year and take the economy back to the dismal days of the 90s.

A finance ministry official told Dawn that 40 per cent of the money pledged at the Tokyo donors’ conference would be used for financing the deficit.

However, a range of new tax measures have been proposed and several non-taxed sectors would be brought under tax net.

The government is planning to set a revenue target of Rs2.27 trillion against the current year’s Rs1.97 trillion. Tax revenues are projected at Rs1.71 trillion and non-tax revenue at Rs560 billion.