The budget 2011-2012, which is not based on a growth oriented budget, is likely to have no remarkable impacts on the country’s exports during the next one year.
As no initiative or new development/proposals have been made by the government while focusing on the minimization of losses under the direction of International Monitory Funds (IMF), the proposed budget would have no positive impacts on exports, sources said adding that the abolition of Regulatory Duty (RD) on 392 items would also discourage the local production of the respective products.
Though the RD would be imposed only on five items including luxuries vehicles, cigarettes, arms and ammunition and imported bathroom fittings, the abolition of the duty would also encourage the increase in the imports which has been facing reduction during the last couple of years.
According to experts, though the gap between imports and exports value/figures has been narrowed down during the last few years reducing it to over US $30 billion from over US$45 billion imports figures previously, with the increase in exports value, the reduction in RD is feared to significantly swell the volume of imports. “As the budget made by the government is in reality prepared on the International Monetary Fund’s dictation there will be a growth oriented budget,” they said.
It is worth mentioning here that Dr. Abdul Hafeez Sheikh the Finance Minister had earlier said as per the government’s policy to lessen the taxation burden on the masses it has abolished the Special Excise Duty on 100 commodities and also eliminated RD on 392 items. The government has also abolished Federal Excise Duty on 15 items and FED would be completely eliminated in next three years. The FED on cement has reduced to Rs500/metric tonne from Rs700/metric tonne and it would be further reduced in the next two years, he added. On the other hand some members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) have also termed the budget as full of contradictions and based on unrealistic assumptions that would not help country’s economy or masses in any way. According to Raza Khan, one of the members of FPCCI, the desired targets cannot be achieved in absence of any positive steps to mobilize resources he said adding that the budget is a gift for the elite enjoying unjustified exemptions. It promises another difficult year for poor masses and businesses. There is no chance to restore macroeconomic stability, create jobs or improve quality of life of the masses in the next fiscal year, said Raza Khan in a statement issued here today. He said that growth rate has dived to 2.4 per cent, per capita income is stagnant, fiscal deficit is at 6 per cent, investments have dried up, external capital flow has stopped, inflation stands at 14 per cent, borrowings have crossed all limits while savings are declining.
The issues of energy shortages, insecurity, instability, bankrupt public sector enterprises and struggle among political parties will continue to drag economy down in the next financial year. He said that the target to reduce the budget deficit to 4 percent is a daydream as steps to make it a reality were deliberately avoided by economic managers. Another member of the federation predicted that the government would continue to push a monetary policy that chokes the productive sectors; it will be printing more currency without considering the impact on poor masses.
