ISLAMABAD: Finance Minister Dr Abdul Hafeez Shaikh finally confirmed on Tuesday that the country's fiscal deficit could cross eight per cent of GDP (Rs1,368 billion) in case the business as usual continued and the political leadership failed to take tough economic decisions.

The dramatic disclosure came after Prof Khursheed Ahmad of Jamaat-i-Islami told reporters that the government's parliamentary committee had painted a very bleak picture of economic indicators.

“Barring exports, remittances and some better expectations from wheat output, all economic indicators including from agriculture, industry and even services are behind target,” he said.

Mr Ahmad said all sorts of expenditures had registered an extraordinary increase, including those relating to security that were 30 per cent higher than the target and interest payments of more than Rs750 billion. Revenue proceeds and other incomes have declined.

“There is a danger that fiscal deficit may be higher than eight per cent of GDP in the absence of a coherent and coordinated economic policy. This is very alarming,” he said.

Dr Shaikh, who declined to take questions from journalists in his brief public appearance, said the government did not hide economic situation from national leaders and sincerely shared with them challenges ahead.

“If business as usual continued and politicians did not help the government in taking big, difficult decisions, fiscal deficit could reach eight per cent but we will not let this to happen,” he said.

He said the economic team had the resolve to tackle economic challenges, the president and the prime minister were supportive and politicians would not like the fiscal deficit to reach that level.

“We will take actions so that fiscal discipline is maintained”.

According to Mr Shaikh, the government had originally estimated fiscal deficit at 3.3 per cent of GDP for the first six months of the current year but with the steps taken by the government it would finally be less than three per cent of GDP for the first six months.

The finance minister said that natural strengths of the economy have also emerged suggesting robust export growth which if maintained going forward would hopefully earn $22 billion by the year end while remittances would cross $10 billion mark.

These two sectors would help improve foreign exchange reserves which are currently at an unprecedented high level of $17 billion.

He said with the support of parliamentary parties, the leadership would hopefully provide a better economic management to produce better results and positively affect the lives of the people.

Prof Khursheed said he told the government's economic team that economic policies of the government had played a major role in poor economic conditions because a coherent, coordinated and prudent economic policy has been missing.