Cabinet okays strategy for next budget

PM urges new budget should focus on welfare of the common man

ISLAMABAD:

The cabinet on Tuesday approved a strategy for the federal budget 2015-16 with Prime Minister Nawaz Sharif saying that the budget should focus on the welfare of the common man “so that the process of transferring the fruits of growing economic stability is further strengthened”.

The cabinet was convened after three months to discuss the budget strategy for the upcoming fiscal year. Speaking to his ministers, the prime minister appreciated the fact that key economic indicators, which, according to him, had hit rock bottom two years ago, have improved remarkably. Out of the box solutions must be explored in designing proposals for broadening the tax base and for increasing revenues.

“A system should be devised which results in reduction of corruption and encourages voluntary compliance from taxpayers,” Premier Nawaz said. He congratulated Finance Minister Ishaq Dar and his team for achieving high growth and stabilizing the national economy.

He appreciated the efforts of Pakistani diaspora for sending their remittances to Pakistan. He said steps should be taken to facilitate the overseas Pakistanis to send remittances through the banking channel.

The prime minister hoped the reduction in policy rate from 8% to 7% would help encourage investment in the country. He also directed the commerce ministry to gear up efforts to increase exports.

He directed his economic managers to ensure the overall prosperity of the masses be the top priority in the next budget and that the current trend of GDP growth continue to increase employment opportunities for the youth.

Dar’s briefing

Finance Minister Ishaq Dar and Finance Secretary Dr Waqar Masood Khan gave a detailed presentation to the cabinet on the strategy being followed in formulation of proposals for the next budget.  Dar said the government was focusing on major policy initiatives aimed at consolidating stability and spurring growth. “This budget will bring encouraging incentives for the betterment of the overall economy and for generation of employment opportunities,” he added. The minister said the budget would acknowledge the development-oriented approach of the PML-N government, adding that the government had tried to incorporate suggestions from different sections of the economy.

“This is the most appropriate time to boost investment in the areas which have the potential to grow at a high rate when the interest rates are historically low and we have more space available for encouraging development works,” he said.

In the medium term the government plan is to gradually grow GDP to around 7% and contain inflation to single digit, ie, less than 6 %, he added. “We intend to bring down fiscal deficit to 4% and increase foreign exchange reserves to $20 billion and have also set the target of increasing tax-GDP ratio to 13% and increase exports to $32 billion.”

He told the cabinet that the FBR tax collection had increased from Rs1,946 billion in 2012-13 to Rs2,266 billion in 2013-14 and during the last 10 months. “The tax collection has reached Rs1,968 billion with an increase of 12.8 % from the corresponding period of last financial year. There has been an increase of 200,000 taxpayers in the last two years,” he added.

Dar said that in its first year the government has achieved a 4.02 % GDP growth rate and during the current year the government would achieve 4.24 % which is the highest in the last seven years. “We have also brought down budget deficit from 8.2 % in 2012-13 to 5.0% during the current year,” he said.

He said overseas remittances have also reached $14.8 billion during the period of July-April of the current fiscal year showing a growth of 16.06%.  He said the foreign exchange reserves have also reached to $17.5 billion on May 25, 2015.

Published in The Express Tribune, May 27^th, 2015.