News
Wednesday, April 27, 2011
Govt eyes 4.2% GDP growth in next fiscal year
* Budget Strategy Paper says Rs 186 billion power subsidy to be withdrawn
* Government to contain inflation at 12% in next fiscal year, budgetary deficit to be 4.5% of GDP
By Sajid Chaudhry
ISLAMABAD: Economic growth target for the next fiscal year 2011-12 would be set at 4.2 percent of the Gross Domestic Product (GDP) along with creation of an independent commission to be announced in the budget for scrutiny of development and non-development expenditures of the government.
Only targeted subsidies would continue in the next fiscal year and the ban on recruitments would also continue in the wake of economic crunch faced by the country, revealed the Budget Strategy Paper 2011-12 presented to a National Assembly committee.
According to the documents provided to the NA’s Standing Committee on Finance, the Rs 186 billion subsidy being given on electricity would be withdrawn to maintain fiscal discipline while the government would have to increase the power tariff in the upcoming fiscal year.
The document obtained from the committee’s secretariat showed that the government would also withdraw various subsidies amounting to Rs 43 billion. It says that according to the Finance Ministry’s estimation, in the next financial year the overall inflation would remain 12 percent due to the economic measures and cutbacks.
“The expenditures of government officers will also be reduced under the ongoing austerity measures,” the document said, adding that another autonomous commission would be established to determine increase in salaries and perks of government employees.
The government would have to enforce stinging policies to increase the GDP while it would also require bringing down to zero its borrowings from the State Bank of Pakistan, the document said. The provinces will be disbursed additional Rs 360 billion under the 7th NFC Award.
According to the document, the fiscal deficit will have to be contained at 4.5 percent of the GDP since it is one of the conditions of an agreement between the government and International Monetary Fund (IMF). The tax to GDP ratio will be brought to 9.1 percent and the growth rate will be 4.2 percent in 2011-12. The tax collection target set for the Federal Board of Revenue (FBR) is Rs 1.952 trillion and the export target has been set at $25.9 billion, while the imports are estimated to be $39.1 billion, mainly owing to increasing oil prices in the international market. The trade deficit in the next fiscal year is estimated to be more than $13 billion. The budget document also states that the growth rate faced a set back in the current fiscal year declining from 4.5 percent to 2.8 percent of the GDP due to the devastating floods in August 2010.
Courtesy www.dailytimes.com.pk