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May 27, 2013

First PML-N budget to seek macro-economic balance

Islamabad

May 27, 2013

ISLAMABAD: The first Nawaz Sharif budget, to be presented on June 7, is likely to accord top priority to correct macro-economic imbalances. It is likely to contain measures for reasonable tax revenue generation and a sizeable cut in government expenditures.
The focus will be on plans to turn around the bleeding public sector entities, sources close to future finance minister Ishaq Dar, who is currently engaged in budget-making, told The News.
The financial managers, however, are tight-lipped about the measures they would take in the next budget to improve the revenue generation outlook saying that they could not divulge which sectors would come under the tax net.
However, the budget makers are looking for a balance between measures to increase the revenue of the country and slashing government expenditure which will help improve macro-economic imbalances.
They said that the current fiscal year may end up with a close to Rs1.6 trillion deficit as the existing budget deficit is hovering at Rs1,100 billion and in case the amount of circular debt of Rs500 billion is included then it would reach the staggering amount of Rs1.6 trillion.
“We are inheriting an economy lying in the ICU which needs some vital decisions to put it on track and we are vigorously working on it.”
When asked at to what measures for increasing the tax base were being taken, the sources said that Ishaq Dar is going to keep all the cards close to his chest and would be unwilling to show them before the budget.
The last government, they said, borrowed a huge amount of $7.6 billion from the IMF and did not fulfill the terms and conditions of that loan programme except to upfront repayments of the loan to the Fund whereas the Nawaz government had moved the IMF in 1997 under an extended fund facility programme and negotiated a better loan and fulfilled 24 conditions.
When asked if the Nawaz government is going to move the IMF, the sources said that the next finance

minister would do what is in the best interest of the country. The direction of the country in terms of economic policies will be in the the supreme interests of the country.
To a question about the expected Saudi facility, they said there is no indication of such a facility emanating from Jeddah so far. However, they said: “Let the time come and miracles can happen.” However, it can be inferred that the Nawaz government will be able to get some reasonable solace from Saudi Arabia and when the time comes, miracles may happen.