ISLAMABAD - The PTI government has unveiled its economic roadmap for next fiscal year that would focus on stabilisation of the economy and austerity measures to control the expenditures of the government.

Hafeez Shaikh said both civilian and military rulers agreed austerity measures were needed to stabilise the economy, but he declined to say whether the military’s budget would be cut.

“The budget that is coming will have austerity, that means that the government’s expenditures will be put at a minimum level,” Shaikh said and added “We are all standing together in it whether civilians or our military.”

“We have presented the roadmap for next fiscal year. The difficult time is going to end soon,” said Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh while addressing a press conference in Islamabad on Saturday.

Hafeez Sheikh said economy will be in stabilisation mode over next six to twelve months before moving in the phase of recovery and high growth.

Prime Minister Special Assistant on Information and Broadcasting Dr Firdous Ashiq Awan, Federal Minister for Planning Development and Reforms Khusro Bakhtiyar, Minister for Petroleum Omar Ayub Khan and Minister for State for Revenue Hammad Azhar were also present in the press conference.

He said next six to eight months will seek stability and after that, there will be progress. He further said that in the coming budget every institution will launch a cost-cutting campaign. “The civilian and army administrations are on the same page for this campaign.”

Sharing some of the points of the next budget, he informed the government has decided to set tax collection target at Rs5.55 trillion for the next fiscal year. He said the government would also take steps to broaden the tax base of the country by bringing non-taxpayers into net. “Only two million Pakistanis file taxes and out of which 1.4 million are salaried.”

Belt-tightening budget on the cards

Rs216b

subsidy for

300-unit

power consumers

Govt eying

Rs5.5tr

revenue target

Ehsaas

Programme to get Rs80b

more

He said new data sources will be explored to identify potential tax payers to bring them into tax net. He said data of 150,000 Pakistanis has been obtained from 28 countries and it will help determine the tax evaders.

Shaikh hinted the government would increase the electricity and gas prices in next fiscal year. However, he vowed to protect poorer segment of the society from the possible price hike. He said the government has decided to allocate Rs216 billion for the subsidy, which would be given to the people who are using 300 units of electricity per month. Similarly, there would be no increase in gas prices for 40 percent low end consumers. He said currently the circular debt is Rs38 billion per month that would be reduced to Rs26 billion in June 2019 and Rs8 billion in June 2020. There would be zero circular debt by December end 2020, the adviser stated.

He announced to enhance the budget for Ehsaas Programme from Rs100 billion to Rs180 billion for next fiscal year to increase the cash stipend given to poor people. The adviser informed the government would allocate Rs50 billion for development of the backward areas of the country. Similarly, it would allocate additional Rs46 billion for FATA. The government has also decided to keep Rs30 billion as subsidy for the food, he added.

Shaikh said the employment opportunities would increase in the next fiscal year due to the government’s scheme of building 5 million houses in the country. The federal government has already approved “Kamyab Jawan Programme” worth of Rs100 billion for extending loans to youth. The government would also allocate Rs280 billion for the development of agriculture sector. He added the government put the federal development programme at Rs925 billion for 2019-2020 from Rs550-Rs600 billion of the current fiscal year. All these measures would help in generating employment opportunities in the country.

The adviser said the provinces share under divisible pool would also increase in the upcoming financial year. Talking about the inflation rate, he said the government would try to protect the poor segment of the society from the oil price hike in international market, which is one of the main reasons behind inflation. Oil price in international market was $24 per barrel in 2014, which increased to $54 per barrel in 2018 and now it has gone to $70 per barrel.

Talking about its short-term plan, the adviser said that IMF loan programme of $6 billion would be operational soon after Fund executive board approves it. The IMF would provide loan at interest rate of 3.2 percent, which is cheaper as against the rate of commercial banks.

“The IMF programme will send a good signal to the international community that Pakistan wishes to take its economy forward in a disciplined manner and

 

 

people will find incentive to form alliances and partnerships with us,” he said.

Meanwhile, the Asian Development Bank and World Bank would provide $2 billion to $3 billion as programme loan to Pakistan following the deal with the IMF, Shaikh said and added the government can’t public the agreement with the IMF till the approval from its board.

He further said the government has given an opportunity to the people to legalise their assets by paying 4 percent under Assets Declaration Scheme before June 30 2019. Otherwise, the government would take action against those who would not declare their assets.

Deferred oil payment facility from Saudi Arabia would be operational from July 2019, which would reduce pressure on foreign exchange reserves, he said and added Islamic Development Bank would also provide deferred oil payment facility of $1.2 billion. He said the government would formulate budget with aim to increase growth of the country.

The confidence of the market would improve after the government’s measures. The Stock Exchange has shown 7 percent increase last week.

He said the economic situation of the country was deteriorated when the incumbent government took charge. Giving details, he informed public debt had increased to Rs31 trillion and foreign loans and liabilities enhanced by Rs100 billion. The country’s foreign exchange reserves were declined from $18 billion to below $10 billion. Exports were showing zero percent growth. Trade deficit had swelled to $20 billion and budget deficit had widened to Rs2.3 trillion in last fiscal year. Inflation was increasing and growth momentum was broken.

The incumbent government after assuming charge had approached friendly countries for improving external sector. The countries including China, Saudi Arabia and United Arab Emirates had provided $9.2 billion to Pakistan. The government had maintained the interest rate to control the soaring inflation rate. The imports have reduced by $2 billion and remittances have increased by $2 billion, which helped in controlling the trade deficit by $4 billion.

He informed that FBR is working to bring non-taxpayers into tax net. Sharing details, he said there are 341,174 industrial electricity connections and 7000 industrial gas connections in the country. However, only 38,937 out of them are sales tax registered, which is too low. He further informed that less than 50,000 of the 100,000 companies registered with the Security and Exchange Commission of Pakistan (SECP) are filing their returns. There are 50 million bank accounts in the country but a large number of account-holders are not paying taxes.