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ISLAMABAD, Jan 18: Leaders of the two major political parties agreed on Tuesday to present within this month a consensus national economic agenda to steer the country out of multiple macroeconomic and budgetary crises.

Teams of the PPP and the PML-N held a point-by-point discussion on the 10-point reforms agenda presented by Nawaz Sharif early this month and decided to come up with specific proposals for containing fiscal deficit which has gone beyond three per cent during the first six months of the current fiscal year against an annual budgetary limit of four per cent.

The government side told the PML-N delegation that their demand for a 30 per cent reduction in expenditures was acceptable, but it would demand a similar cut in provincial expenditures. This will be shared with the provincial governments on Wednesday because the PPP and the MQM in Sindh, the ANP in Khyber Pakhtunkhwa and the PML-N in Punjab will have to accept the proposal before the finalisation of a plan for implementation.

Sources said the government had told almost all parties that most of the economic pressure had built up because of carryover of huge fiscal deficit from the previous government which did not pass on energy prices to consumers even when international oil prices increased from $90 to $147 a barrel and the current government was facing a similar situation. Most public sector corporations have since been bleeding mainly because of this single factor.

Finance Minister Dr Hafeez Shaikh told journalists after the four-hour meeting that proposals presented by the PML-N were quite reasonable. “This has to develop now into a national agenda for economic reforms after they hear our suggestions.”

He said the two sides had agreed to finalise specific proposals on Jan 20, and after consultations with other parliamentary parties a comprehensive plan for economic revival would be presented on Jan 26 for implementation.

Dr Hafeez said the president and the prime minister had authorised the government team to prepare a national economic plan in discussions with parliamentary parties.

“Although there are serious challenges, some positive things are also coming up. There is an expectation of over $10 billion inflow of remittances from overseas Pakistanis and export proceeds of about $20 billion,” he said.

Ishaq Dar, who headed the PML-N delegation, said that discussions were ‘very positive’. He said that economic challenges were so enormous that the two sides should have finalised the plan for economic revival at the meeting, but a certain mechanism had to be followed to evolve a consensus on crucial structural challenges.

“The two sides agreed that the enormity of economic challenges demanded a combined political effort,” Finance Secretary Dr Waqar Masud said, adding that the political leadership had been given a comprehensive briefing on the overall economic situation and informed that the pace of rise in fiscal deficit was unsustainable if not controlled immediately.

He said the government would provide the PML-N a set of budgetary proposals for a reduction in fiscal deficit both at the federal and provincial levels because if the centre had to cut its expenditure by 30 per cent the provinces would have to do the same.

The provinces had promised to provide a fiscal surplus of Rs167 billion for the current year. This is a difficult target and may not be achieved because of the changed economic situation, but they will have to keep it closer to the target.

Dr Waqar declined to comment on specific proposals like reformed general sales tax, flood surcharge, cut in salary of government employees, freezing of defence expenditure or other taxation proposals on which the government team has been working for two weeks.

He said the two sides had also agreed to remove differences over the new accountability law and formation of an independent accountability commission.

He said the government had withdrawn an increase in prices of petroleum products on the demand of political parties and would now like to see their suggestions for a workable pricing mechanism because oil prices were rising in the international market.

Dr Waqar said the two sides would come up with proposals for increasing revenue because a shortfall was emerging both on tax and non-tax revenue fronts. “Everybody has to tighten the belt, not only the centre but also the provinces.”

Responding to a question, he said the pressing needs of security forces would have to be met in view of the ongoing war on terror.

Earlier, the government’s parliamentary committee, headed by Dr Shaikh and comprising Petroleum Minister Naveed Qamar, Law Minister Babar Awan and Minister of State for Economic Affairs Hina Rabbani Khar, briefed delegations of the Muttahida Qaumi Movement and the Awami National Party on the economic situation.

MQM leader Farooq Sattar said the economic situation portrayed by the government team was so precarious that it could not be accurately described in words. He said his party would play its role in steering the country out of the crisis in wider national and public interest. He said the political dialogue on economic issues would give a positive message to people and their solutions would be found through understanding.

Haji Adeel of the ANP said that the challenges of poverty, unemployment, repayment of foreign loans and tough economic conditions required big decisions because routine solutions would not work.

The government team would hold a meeting with a PML-Q team, led by Chaudhry Shujaat Hussain, on Wednesday.