ISLAMABAD: Terming it the highest in the past three years, Finance Minister Abdul Hafeez Shaikh announced that the government achieved a growth rate of 3.7% this year as compared to 3% last year. “It has been constantly growing, but not as fast as we wanted. Our medium-term goal is to take it up to 5-6%.”
The minister, addressing the media at the Economic Survey 2011-12 launch on Thursday, said that the government could not achieve the growth rate it wanted due to several certain factors, including the unstable security situation which made international investors reluctant to invest in Pakistan. He added that the monsoon season last year also hindered growth as it destroyed crops in Sindh and Balochistan and caused a loss of $3 billion.
Shaikh added that in order to bring down inflation in the country, the expenses of the civilian government were cut and it was 10% lesser this year in comparison to the last year.
“The government’s first priority is to curb inflation. The government has done everything which was in its capacity for the purpose,” said Shaikh.
The minister outlined the three ways of measuring inflation: consumer price index, wholesale price index and the sensitive price index. “The average consumer price index this year was 10.8% as compared to last year’s 13.8%… The wholesale price index was 21% last year, but this year it was 11.2%. The sensitive price index was also brought down from 18% last year to 8.5%.”
Shaikh maintained that despite these reductions, the results have not been good enough. “People are facing inflation… But the government is trying its best to get rid of the problem.”
Tax revenue collection
The minister highlighted that the tax revenue, one of the ways for the government to curb inflation, needs to be collected to ensure self-sustenance of the country. “This is a very difficult job. There are powerful people, groups and representatives of industries, who do not want to be burdened by tax.”
But, he added, the government brought down the federal excise duties, special excise duties and reduced the taxes.
“The tax collection in the first 10 months of this year amounted to Rs1,449 billion, while in the same 10 months last year, it was Rs1,250 billion.”
“The tax revenue collection in one year was 25%, which is unprecedented in the history of Pakistan.”
Budget allocation to provinces
The minister said that the government provides all provinces with their due shares right away. “Around 65-70% of the budget is given to the provinces on the very first day. The federal government is then left with only 30%, in which it has to oversee a lot of things including the defence budget, federal government’s expenses and loan repayment.”
The minister said that the government has allocated more money to provinces to strengthen the country. “The provincial governments can directly help its people and fulfill their needs.”
Terming it as the biggest expense, the minister said that Rs300 billion were allocated for developmental projects.
Highlights of Economic Survey 2011-12 can be read here.