Govt misses all fiscal targets

While admitting that the government had failed to achieve all of the key economic targets for the current fiscal year, Finance Minister Dr Abdul Hafeez Shaikh claimed on Thursday that per capita income had increased by 16.9 percent to $1,254 this fiscal year from $1,073 in the last fiscal year, but failed to give any figures on poverty.
Addressing a news conference at the launch of the Economic Survey 2010-11, he said Real Gross Domestic Product (GDP) was estimated to grow by 2.4 percent, compared to actual growth of 3.8 percent last year on a target of 4.5 percent. About the fiscal deficit, he said, it was estimated at 5.3 percent of the GDP, but because of Rs 120 billion in power subsidies it would increase to 5.9 percent of GDP.
He claimed that controlling fiscal deficit was not the sole responsibility of the federal government as the provincial governments also had an important role, as they were independent in their revenue and expenditure measures under the emerging system. All five governments were responsible for the fiscal deficit, he said, but the Centre could not force the provinces to generate a surplus.
Admitting for the first time that the International Monetary Fund (IMF) programme was suspended, he said that the suspension of the programme had resulted in stoppage of budgetary support from other international financial institutions. However, he said funds under the Coalition Support Fund were coming in and during the current fiscal year, $745 million were received from the United States.
He said the government was focusing on taxing the rich to generate additional resources to meet its requirement on a self-sustainable basis. He expressed the hope that the Federal Board of Revenue (FBR) would meet the revenue target for the current fiscal year as measures to curb tax evasion were likely to yield results during the current month. The minister did not give any figures on poverty even though double-digit inflation in the last four years has adversely impacted the poor.
He said a survey would be carried out to assess poverty that would be completed next year. The last survey for poverty was held in 2005-06, which had pegged 30.9 percent of the population below the poverty line.
However, the Economic Survey says the Asian Development Bank’s study on Global Food Price Inflation and Developing Asia maintains that a 10 percent rise in domestic food prices in Pakistan for one year could push an additional 3.47 million people below the $1.25-a-day poverty line or worsen the poverty situation by 2.2 percent.
When asked about the unemployment figure, Finance Secretary Dr Waqar Masud said it was estimated by the Pakistan Labour Force survey in 2009-10 to be 5.8 percent. The survey said Pakistan had a total labour force of 54.92 million, out of which 3.05 million was estimated to be unemployed in 2009-10, with an unemployment rate of 5.6 percent for the current fiscal year.
Shaikh said growth in agriculture was estimated at 1.2 percent while the major crops recorded a decline of 4 percent because of floods. The manufacturing sector recorded a growth of only 3 percent because of energy shortages. Only the services sector grew by 4.1 percent against the target of 4.7 percent, he added. He said the main reasons for the failure to not meet economic targets were the devastating floods in August last year, increase in security-related expenditures and unprecedented increase in international oil prices.