Govt decides to budget deficit below 6.5 % : Naveed Qamar

KARACHI: The Government has decided to bring the budget deficit below 6.5 percent during fiscal year 2008-09, against the existing 29 percent. In the year 2009-2010, the deficit will be cut down further.
“ We will not allow the deficit to rise above 6.5% this year. In next fiscal year, it will brought further down ,” says Federal Finance Minister, Syed Naveed Qamar here in media briefing after a meeting with members of Overseas Investors Chamber of Commerce and Industry (OICCI) and Chief Executives of multinationals during his first visit to OICCI on Monday.
The Minister said that as immediate measure to check the budget deficit of 29 %, the Government would drastically cut non-development expenditure excluding salaries of government employees and rationalize the development expenditure.
For this purpose, he said, the Government would initiate more saving schemes with high profit margin, and in the next phase new bonds would floated in the market.
The tax base would also be broadened, along with rationalization of the taxes/ duties.
He said the budget, which is scheduled to be announced on June 7, would bring maximum relief to the poor.
“ We will give direct relief in cash or kind to those living below the poverty line . The rich people will have to share some burden in the shape of taxes etc.”, he said.
The Minister said the National Finance Award would be announced in the budget. Then, the provinces would be requested to nominate their members for the proposed committee which would streamline the things further and finalize this document.
When his attention was drawn to the depression in Stock Exchanges, he said the market liquidity would be strictly checked through some corrective measures from the Ministry of Finance and State Bank of Pakistan.
About the Government borrowings from SBP, he said the Government would stop it forthwith and has other options on its card to have sufficient funds with it.
He expressed satisfaction that during next month around 300 million dollars as remittances from Overseas Pakistanis are expected to come in.
Syed Naveed Qamar said that the Government has planned various measures to control inflation which is caused by domestic and outside factors.
“ We are committed to bring economic stability at the earliest,” he said.
PPPP-led Government would take all the major political parties/groups on board in the formation of the budget so that it is owned by all and could prove more result-oriented, he said.
The Federal Minister for Finance, Revenue and Economic Affairs informed the media that he had detailed discussion with President OICCI, Waqar A. Malik, members of managing committee of the Chamber and Chief Executives of some multinationals on wide range of issues relating to investment and trade. Intellectual Property Rights issue came up as one of the main item.
“ I have very good input from OICCI team,” he acknowledged.
He said more interaction would be kept with OICCI so that the objectives of the Government and the Chamber could be achieved.
President OICCI, Waqar A. Malik, on this occasion, told media that OICCI, which is a premier body for foreign investment in Pakistan, suggested the Minister the key areas where the Government could work to address the trend of declining foreign direct investment (FDI)
The policy directions suggested for the forthcoming national budget and related measures included : enforcing fiscal responsibility laws—aggressively cutting non-development expenditure—widening the tax base to include untaxed and under-taxed sectors—reducing excessive taxation and cutting tariffs on items not manufactured locally—curbing smuggling and under invoicing so as to protect items that are produced locally and/ or imported through legal channels. This will also increase government revenue—allowing market prices but at the same time introducing some incentives for the poorest sections of the society—fast track privatisation to ensure that public sector enterprises are sold in a transparent and efficient manner. At the same time ensure that the proceeds of the sales are used strictly for debt retirement and for poverty reduction—increasing expenditure on health and education with special emphasis on vocational training for skill development— boosting the agriculture and manufacturing sectors—aggressively targeting foreign direct investment.
Mr Malik said FDI is needed to fuel economic growth, to create employment opportunities and most importantly to maintain currency stability and help manage trade and current account deficits.
He said Pakistan has long term growth drivers such as favourable demographics with 54 percent of the population below 19 years of age.