Budget Strategy Paper 2011-12: Govt expects economy to grow at 4.2% next year

Commission proposed to determine salaries of government employees.

Shahbaz Rana April 27, 2011


The government anticipates that economic growth will be recorded at 4.2 per cent and the budget deficit will be Rs900 billion during the next financial year, according to its budget strategy paper to be presented today (Wednesday) before the National Assembly standing committee on finance.

The Budget Strategy Paper 2011-12 says that inflation is expected to be 12 per cent in light of a withdrawal of subsidies.

The anticipated economic growth will be contingent upon the enforcement of some stringent economic policies and bringing borrowing from the State Bank down to zero, according to the paper. And, though ambitious, the growth of approximately 4.2 per cent in the Gross Domestic Product (GDP) is still below what is required to create jobs for the three million fresh entrants into the job market.

As for inflation targets, the  12 per cent that is anticipated by the government is below the 15 per cent target set for the end of June. In any case, this will be the fourth successive year of double-digit inflation under the incumbent PPP-led coalition government.

Regarding the fiscal deficit – that is, the difference between income and expenditure – the paper says that it will have to be contained at 4.5 per cent of the GDP, which is one of the conditions of the IMF loan programme.

In terms of receipts, the tax collection target set for the Federal Board of Revenue is expected to be around Rs1.952 trillion – however, a final assessment will be made after the conclusion of upcoming talks with the IMF. The strategy paper also talks about increasing exports to $25.9 billion, while the imports are estimated to be $39.1 billion – a trade deficit of $13.2 billion.

The strategy paper also mentions the disbursement of an additional Rs360 billion to the provinces under the 7th NFC award.

The paper further states that, while targeted subsidies would continue, the government will withdraw the remaining subsidies that are likely to touch Rs186 billion by end June. This  in turn, is expected to push the cost of goods and services. The purpose of the withdrawal of subsidies is said to be to maintain fiscal discipline.

Besides a withdrawal of electricity subsidies, other subsidies, amounting to Rs43 billion, will also be taken away from the next fiscal year.

“The expenditures of government officers will also be reduced under the continuing austerity measures,” the strategy paper says.

It adds that another autonomous commission will be established to determine an increase in the salaries and perks of government employees. The finance ministry has said that there is a need for creating parity in the salary packages of government employees in various categories. The commission will also consider reducing disparities among government employees and those of autonomous and semi-autonomous bodies in the public sector.

Published in The Express Tribune, April 27th, 2011.


Ali | 10 years ago | Reply @aman: It is silly to say that Karachi alone "create all gdp growth". As a city it relies on the rest of the country for raw material, manpower, gas, electricty etc. Without this essential contribution no city or industrial area can "create all gdp growth". If your mohajir family migrated from India, so did mine, and they did so because the condition of Muslims in India had deteriorated to such an extent that they could no longer live there anymore. If you cant tolerate the conditions in Pakistan, either make a constructive effort to change them or migrate again !!
aman | 10 years ago | Reply Good for pakistan but it should grow at 6% to create revenue and curtain the deficits!! What about mohajir city of karachi?does this city only create all gdp growth and other states,city gobble the share of our mohajis family who migrated from india
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