ISLAMABAD, April 9: An increase in the salaries of government employees, new job creation, enhancing development spending, reducing corporate tax and offering new incentives to the housing and construction industry are the main elements of the budget for 2003-04.

Official sources told Dawn here on Wednesday that a proposal consisting of five main elements was currently being looked into by the budget planners to be shortly submitted to Prime Minister Mir Zafaruallah Khan Jamali for approval at a briefing.

The focus of the new budget, they said, would be to ensure an adequate increase in the salaries of government employees, specially after having drastic reduction in the amount of annual debt servicing from 64 per cent to 42 per cent.

The sources said the reduction in the current expenditure and falling interest rates have provided some good “fiscal space” to the government to consider certain increase in the pay structure of government employees.

Moreover, the collection of appropriate taxes by the Central Board of Revenue during the first nine months of the 2002- 03 has made the job of the government possible to consider welfare oriented policies, including to offer more salaries to its employees. The CBR has collected Rs310 billion against a target of Rs309 billion during the first nine months of the current financial year.

“And now we hope to have more revenue during the remaining three months which means we will exceed revenue target of Rs460 billion,” a source said. He pointed out that under the present circumstances the government could fix its GDP growth target at 5.5 per cent or 6 per cent in 2003-04 against current year target of 4.5 per cent. Likewise, revenue collection target could be easily fixed at Rs480 billion for the next financial year.

The sources said the government will be concentrating on job creation rather than reducing the prices of electricity, gas, atta (flour), etc. They said there be a greater emphasis on growth and investment in the new budget. There had been 8.4 per cent industrial growth during the first nine months of 2002-03, which the sources said, was likely to further increase. And that was why the government has chosen housing and construction industry for major thrust in the next budget with a view to offering more jobs to the people.

The sources said the government had decided to offer adequate loaning facilities to the housing and construction industry in the new budget for which the commercial banks would be given certain directive by the Ministry of Finance.

“Budget composition will be changed in favour of social sectors,” another source said. He said since there had been a reductionpc to 4.9pc, (Rs180bn) the government planned to undertake more development projects across the country.

Dr Ashfaque Hasan Khan, economic adviser to the Ministry of Finance, when contacted said the government was now in a better position to do some thing for its people. He said the government’s banking and non-banking borrowings had reduced due to decline in interest rates, including that of the National Saving Schemes (NSS).

Responding to a question, he said the new budget would have considerable increase in the Public Sector Development Programme (PSDP) against the current year allocation of Rs134 billion.