The federal cabinet is said to have approved budget strategy for the next fiscal year, targeting 6 per cent growth and bringing down inflation to 4 per cent of the GDP by June 2020. A press release issued after the cabinet meeting, presided over by the Prime Minister Nawaz Sharif on broader budget contours of the next fiscal year and Budget Strategy Paper 2017-20, quoted Finance Minister Ishaq Dar as saying that as per the Fiscal Responsibility and Debt Limitations Act, the fiscal deficit of the federal government would be brought down to 4 per cent of GDP by June 2020.
The government had budgeted 3.8 per cent fiscal deficit for the current fiscal year, however, senior officials of Finance Ministry acknowledge that it is likely to be missed by a sizeable margin due to feared shortfall in projected tax and non-tax revenue.
An official on condition of anonymity said the finance minister has held back to back meetings with FBR officials during the last two days and directed them to make every possible effort to maximise the collection. Dar stated that the government has devised a medium-term macroeconomic strategy to increase foreign reserves and reduce fiscal deficit.
He further stated that the upcoming budget will demonstrate fiscal prudence while focusing on key investment sectors such as CPEC, energy, communications, and poverty reduction, etc. He said that fiscal prudence will provide impetus to lower inflation, higher investments and low public debts. The minister also added that the government had initiated a study on revaluation of the GDP as many sectors are currently not fully recorded in the national accounts.
The meeting was also informed about the government's resolve to provide incentives to farmers for enhancing agriculture productivity. It was apprised that the Prime Minister's agriculture package has yielded positive results on agriculture output as demonstrated by bumper crops of sugarcane, wheat and maize. The finance secretary on the occasion made a detailed presentation on the current state of the economy, outlines of the budget 2017-18 and the medium-term macroeconomic framework.
He told the members of the cabinet that despite challenges, Pakistan's economy is moving in the right direction. He said inflation has been contained to 4.09% in the first nine months of the current financial year and credit to private sector has grown by 53% with agriculture credit by 23% in the first ten months as compared to the same period of last year.
In order to achieve 6 percent of economic growth, the finance secretary said that the measures will be taken to enhance growth in agriculture, industrial and services sectors of the economy. Prime Minister Nawaz Sharif said the focus of the next year's budget would be on achieving higher, sustainable and inclusive growth. He directed the cabinet members to accord priority to areas under their domain that could lead to improved economic growth and generate additional employment opportunities.
While chairing the meeting on budget strategy paper, the Prime Minister stated that the government is determined to increase investments in both human and physical infrastructure. In this regard, highest priority would be accorded to the increase in development budget and poverty reduction. He said time has come for the nation to reap the benefits of the economic policies of the government.
The Prime Minister asked members of the cabinet to suggest measures which would discourage hundi and other informal channels for money transfers leading thereby to increased foreign remittances through regular channels. The Prime Minister valued market capitalisation in the stock exchange that would soon touch $100 billion. The meeting was reportedly informed that federal outlay may be around Rs 4.7 trillion for the next fiscal year with around Rs 850 billion allocation for federal Public Sector Development Programme. Federal Board of Revenue tax collection target may be fixed around Rs 4 trillion for the next fiscal year. The defence expenditure may be around Rs 950 billion. The federal budget is scheduled to be presented on May 26. The Prime Minister has reportedly directed the Ministry of Finance to ensure relief measures for the general public in the last year of his government's tenure.
Copyright Business Recorder, 2017