The government has decided that the monetary expansion for the next fiscal year will be in line with the projected Gross Domestic Product (GDP) growth of 4.2 percent in order to encourage private sector investment and maintain the inflation target of 13 percent. This forms the crux of the recommendations sent for consideration to the Annual Plan Coordination Committee (APCC) to decide the Annual Plan for the next fiscal year here on Friday.
An official source privy to details of the working paper for the APCC said that the main focus of next year’s fiscal policy would be to bring fiscal deficit within manageable levels by imposition of the Reformed General Sales Tax (RGST), wealth tax and capital gains tax on the real estate sector, and bringing agricultural income under the tax net. The GDP growth target for next year is projected at 4.2 percent, with a target of 3.4 percent growth from agriculture, 3.7 percent in manufacturing and 5.1 percent in the services sector.
However, the recommendations state that it is imperative that government borrowings from the central bank be limited to a safe level of 10 percent of revenue of the previous fiscal year. The recommendations stress that efforts should be made to control inflation by following fiscal stringency, tight monetary policy and adequate supply of essential items. It was also proposed that the reliance should be on stable sources of external financing such as foreign direct investment and remittances.
