Home »Top Stories » Government decides to present fiscal year 2019 budget on April 27

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  • Mar 10th, 2018
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The government announced on Friday that next fiscal year budget will be presented on April 27, 2018, claiming that fiscal deficit for the outgoing year will be below 5 percent. Speaking at a news conference along with Minister for Planning, Development and Reforms Ahsan Aqbal and Minster of State for Economic Affairs Rana Afzal Khan, Adviser to the Prime Minister on Finance Miftah Ismail stated that after consultations with opposition parties, including Pakistan Peoples Party (PPP), Pakistan Tehreek-e-Insaf (PTI) and others, it was decided that the federal budget would be presented on April 27.

He pointed out that the incumbent PML-N government would complete its tenure on May 31 and the decision of an early presentation of the budget was also taken keeping in view the commencement of the month of Ramazan in the mid of May. Giving an overview of the status of the country economy, he maintained that the government has achieved macro-economic stabilization while economic growth has accelerated.

He hoped the target of 6 percent of GDP for the current fiscal year would be achieved which will be the highest in last 10 years. He pointed out that the GDP was 3.68 percent in 2012-13 while in last fiscal year it stood at 5.28 percent. Referring to the public debt, he said that the total public debt stood at Rs 20,878.3 billion (61.6 percent of GDP) on December 2017 while the net domestic debt was Rs 13,495.8 billion (41.1 percent of GDP) and external debt remained at Rs 7,382.4 billion [20.6 percent of GDP).

To a question about the existing circular debt of Rs 500 billion, the adviser hoped that the incumbent government would pay back the debt before the completion of its tenure. He also claimed that IMF has appreciated the growth trend in Pakistan. He said that fiscal consolidation was achieved through improved revenue collection by elimination of tax concessions and exemptions, broadening of tax base and better tax administration as well as prudent expenditure management by rationalization of untargeted subsidies.

The total FBR, which collected Rs 1,946 billion in 2012-13, is achieving the target of Rs 4,013 billion in the current fiscal year, he said, adding that the total net federal revenue receipts in the year 2012-13 were Rs 1,560 billion while a target of Rs 2,926 billion is going to be achieved in the current fiscal year.

He further said fiscal deficit which was 8.2 percent of GDP in 2012-13 would be reduced to 5.5 percent in the current fiscal year. He said the federal government would transfer Rs 2,384 billion to provinces in the current fiscal year.

He said that on one hand fiscal deficit has been contained while on the other, federal PSDP has been increased three folds since FY 2013. The size of federal PSDP was Rs 348 billion in 2012-13 and it will be of Rs 1001 billion for the current fiscal year, he added.

He further said the corporate tax rate was reduced from 35 percent to 30 percent between 2013-14 and 2017-18.

The adviser said the foreign direct investment was $1.5 billion in 2012-13 and hoped that the target of $4.1 billion would be achieved in the current fiscal year. He said that power, oil and gas exploration, communication, and financial sectors are the key recipients of FDI. Major inflows are from China, the UAE, the US, Hong Kong, the UK and Italy, he added.

Referring to external sector, he said that a high growth trajectory and rapid implementation of energy and infrastructure projects have increased external sector pressure and current account is likely to be widened to around 5 percent of GDP in the current fiscal year.

The current account deficit from July-January fiscal year 2017-18 stands at $9.16 billion, which is indicative of higher foreign savings, he said, adding that the robust import demand led by capital goods [20 percent], petroleum products [23 percent] and industrial raw materials [9 percent] highlights significant investment in production activities.

The imposition of regulatory duties (RDs) is helping contain imports while the Export Package has helped in increasing exports by 11.8 percent during July-January 2017-18 as compared to the same period of last year, he said.

In FY 2013, foreign exchange reserves had declined to US $11 billion, which rose to US $24.5 billion in October 2016, but have since declined as a result of higher imports of growth enhancing capital equipment and machinery, according to him.

He also stated that financing is being arranged to ensure that pressure on reserves is minimized. He said that remittances are expected to stay strong and grow to around $20 billion in FY2017-18, adding that project financing continues to be strongly supported by multilaterals and commercial borrowing also remains strong and at manageable mark-up rates.

In the medium-term as the projects are fully functional and economy''s productive capacity improves, growth is likely to pick up above 6 percent, moderating external pressures on the economy, he said.

About placing Pakistan in the FATF grey list, Minister for Planning, Development and Reforms Ahsan Iqbal said that it was completely a politically-motivated move initiated by the US, adding that it has nothing to do with the facts as Pakistan has undertaken solid measures under the National Action Plan. He said the actions taken by Pakistan have already been recognized by the European Union. However, he said that inclusion of Pakistan in the grey or even in the black list will not have any impact on country''s economy.

He pointed out that Pakistan was included in the FATF blacklist in 2008 and after the commitment of the then government, the country was placed on grey list. However, the then government failed to fulfill the commitment and Pakistan was again placed on the FATF blacklist in 2012.

In 2014, he said, Pakistan was removed from the FATF blacklist and was again placed in its grey list. However, after the effective measures undertaken by the government, Pakistan was removed from the grey list in 2015. "This is not a new thing happening with Pakistan. In fact, from 2008 to 2014, Pakistan remained either in the black list or in the grey list of the FATF and the sky didn''t fall during that time as well," he added.

On the status of economy, he said that average growth of national economy remained 4.85 percent during the last five years as compared to 3 percent growth rate during the tenure of the previous government.

He maintained that Pakistan has become the fifth fastest emerging economy, showing an increase of 2 percent. He said the agriculture sector''s growth grew to 2.5 percent from 1.5 percent, while industrial sector climbed to 5.6 percent from 2.7 percent, which is being appreciated by international institutions.

He said the country also witnessed tremendous progress in the energy sector and succeeded in breaking the backbone of terrorism, which had been affecting the national economy.

He said the government made highest investment in higher education sector, which triggered a new wave of development in universities across the country to expand scientific and laboratory programmes.

He said that huge investment has also been made in the country''s infrastructure, energy and industrial sectors under China-Pakistan Economic Corridor (CPEC) which would result in giving boost to the economy.

He further said the government had invested over US $1 billion to revive the Railways while under CPEC, over $8 billion are being invested to upgrade the railway sector. He said that Gwadar Master Plan would be completed within five months and after its completion, work on a state-of-the-art Gwadar port would begin.

He said for the first time in country''s history, the government had made it possible to utilize the precious Thar coal and by the end of current year, the local coal would start producing electricity which would continue to produce electricity for the next 400 years as the coal reserves in Tharparkar have energy equal to that of Iran and Saudi Arabia''s oil and gas reserves.

To a question about opening of bank account of an absconder Ishaq Dar, Minister of State for Finance Rana Afzal said that Dar is no more a finance minister, adding "he is a minister without portfolio."

He defended the opening of the bank account by Dar, saying that opening a bank account was necessary for contesting the Senate elections, adding, "The biometric verification required for opening of a bank account can be done from any foreign mission of Pakistan abroad."

Copyright Business Recorder, 2018


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