Finance Minister Shaukat Tarin has said the government is planning to boost spending on large infrastructure projects by as much as 40% to create jobs and foster productivity in an economy crippled by the ongoing Covid-19 pandemic.
In an interview with Bloomberg in Islamabad, Tarin said that the federal government will earmark as much as Rs900 billion ($6 billion) for development expenditure in the year beginning July.
He added that the economy needs to expand by 5% next year.
“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month. “There is almost 110 million youth.”
Tarin, who took office last month as the fourth finance minister of the country since Prime Minister Imran Khan’s government took power in 2018. He has also served in the role between 2008 and 2010.
Tarin’s plan will reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimates to be a little above 7% of GDP in the current fiscal year through June, against 8.1% in the previous year. Tarin said he expects the deficit in the next fiscal year to be 1 or 1.5 percentage points lower.
The finance minister’s 5% growth target for next year is a percentage point higher than the IMF’s 4% projection, and he is seeking to boost growth to 6% in the year after.
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“We need 2 million jobs every year,” Tarin said. “If we do not go into growth mode, we will have a major crisis on the streets.”
“First we have to get more revenues,” Tarin said, adding that he’s targeting about Rs6 trillion next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”