- With next year’s revenue target set at Rs 311b and PSDP at Rs 580b, GDP growth target set at 5.5pc
- PML-N’s Daniyal Aziz says Finance Ministry sabotaging govt’s efforts by stimulating inflation through fiscal policy
A parliamentary panel on Wednesday unanimously asked the government to negotiate better terms with the International Monetary Fund (IMF) for taking growth measures in the upcoming budget to revive the manufacturing sector to achieve 5.5 percent GDP growth target set for the next fiscal year.
The meeting of the National Assembly Standing Committee on Finance, chaired by Omer Ayub Khan, was briefed by the Ministry of Finance and Federal Board of Revenue officials about the budget strategy for the next fiscal year.
Finance Secretary Dr Waqar Masood Khan informed the committee that the government has decided to fix the next fiscal year PSDP at Rs 580 billion and revenue collection target is being set at Rs 3,100 billion as compared to the budgetary target of Rs 2,810 billion for the current fiscal year. After a shortfall of Rs 205 billion, the target has been revised downward to Rs 2,605 billion. He said the inflation target is being revised upwards from current year’s 4.8 percent to 6 percent for the next fiscal year.
This angered Pakistan Muslim League-Nawaz (PML-N) leader Daniyal Aziz who said the Finance Ministry was sabotaging the efforts of the government by stimulating inflation through fiscal policy. “On the one side they are advocating use of magistracy by provinces to arrest the shopkeepers and on the other they are skilfully burdening the people through their policy measures.”
“They are creating a smoke screen to burden the poor and facilitate the rich. We should take a deeper look who they are trying to benefit by increasing the inflation target to 6 percent, instead of decreasing it to 3 percent,” Aziz asked.
His argument was supported by the committee which decided to call a special meeting to look at the issues of inflation, government borrowing from commercial banks and low financing sought by the private sector.
The finance secretary said the government will meet the fiscal deficit target of 4.9 percent of GDP for the current fiscal year, while it will achieve 4 percent deficit target for the next fiscal year. He said that the IMF has approved a one-time additional deficit of 0.3 percent of GDP or Rs 100 billion for the expenditures on Operation Zarb-e-Azab and rehabilitation of temporarily displaced persons (TDPs).
He said the government had so far incurred Rs 15 billion on Zarb-e-Azab, another Rs 45 billion were required for the next fiscal year while Rs 45 billion would be required for TDPs resettlement.
The committee expressed concern over FBR’s performance, especially through the numerous mini-budgets during the current fiscal.
Defending the performance, FBR Chairman Tariq Bajwa said that they were facing double whammy in tax collection.
The sales tax collection was based on the large scale manufacturing target of 7 percent, which declined to 2.5 percent in first nine months of the current fiscal. Secondly, the POL prices nose-dived. Under these circumstances, tax collection target could not be achieved, he said, adding that sales tax has a negative growth of 5 percent this fiscal.
The members wondered as to why the decline in international commodity prices failed to accelerate economic growth in the country.
The State Bank of Pakistan (SBP) representative told the committee that the private sector took financing worth Rs 140 billion this fiscal as compared to Rs 284 billion taken last fiscal year.
Pakistan People’s Party (PPP) leader Naveed Qamar said building foreign exchange reserves of $ 19 billion was good, being under an IMF programme, but now the government should change its priority and let growth gain momentum. “The reserves are for the people of Pakistan and let’s now give growth a chance.”
A heated debate took place between Dr Waqar Masood and Daniyal Aziz on the utilisation of Rs 27 billion additionally given to KP under the one percent collection on account of war against terrorism damages through the NFC award.
Dr Waqar said the Centre could not ask for details of utilisation of funds, while Aziz said the federal government could as provincial government was “misusing it on helicopters and other VIP whims”.
