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| Economists want cut in defence budget |
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Monday, October 20, 2008
By Mehtab Haider
ISLAMABAD: A high profile panel of economists, established by the PPP government, has asked Islamabad’s financial managers to cut defence spending for the current fiscal year 2008-09 in order to reduce current expenditures.
The panel of economists, which worked under the chairmanship of Dr Hafiz A Pasha for the last one month, is likely to present its detailed findings to Prime Minister Syed Yousuf Raza Gilani probably on Oct 25 or 27, 2008, depending on the date given by the Prime Minister’s secretariat.
The panel has also asked the government to cut development expenditure by Rs60 billion to Rs100 billion for the current fiscal year, sources said. It urged the government to bring agriculture income and services sectors into the tax net with immediate effect.
“There should be no holy cows in terms of reducing expenditures as well as generating additional revenues as we have made efforts to come up with a report which could create interest of multilateral creditors to restore dollar inflows,” said a member of panel of economists while talking to The News here on Sunday.
The panel of economists, he said, prepared a macroeconomic model and come up with its findings that the government could not achieve its envisaged fiscal deficit target of 4.7 per cent of the GDP if major expenditures cut down was not being done.
Citing example, sources said the provinces expenditures exceeded to Rs 287 billion for the current fiscal year against budgetary allocation of Rs 150 billion. Under this economic model, the burden will have to share everyone including the defence side in order to cut down expenditures, said the official.
The economic growth, under envisioned economic stabilization program has been projected to scale down from 5.5 per cent GDP to 4.4 per cent for the current fiscal year, inflation to be jacked up to 20 per cent and making efforts to impose agriculture income tax and sales tax on services sectors.
The panel of economists also recommended to the government to reduce consumption of oil, focus on agriculture and manufacturing sectors to boost exports and brought every potential sector, including the agriculture and services sectors into the tax net.
The economic stabilisation program envisioned by the planning commission’s panel of economist has not given any solution to immediate financing gap of $3.5-4.5 billion being faced by the country during the current fiscal year, it is learnt.
“It was not our mandate to give solutions to the incumbent regime in this regard. Our mandate was to put in place a credible macroeconomic program on the basis of which the International Financial Institutions (IFIs) would start pouring their money into Pakistan’s national kitty at this hour of need,” he added.
However, a finance ministry official said there was nothing new in this report as they have given all these recommendations to the government which were not implemented and now prescription would be diagnosed by the IMF after one and half month.
When acting chief economist and convener of the panel of economist Dr Rashid Amjad was contacted for comments, he said the main focus of the report was to compress demand side and it required reduction in expenditures side. “There should not be any holy cows in this regard,” he added.
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ISSN 1563-9479 
