Pakistan can be part of G-20 by 2030, claims Dar

ISLAMABAD: While slashing down the fiscal deficit by half and doubling FBR’s revenues in four years, Federal Minister for Finance Ishaq Dar said that last two “coward” governments did not bother to launch a military operation in North Waziristan Agency (NWA), for which the country had to bear cost of Rs300 billion in last three years as big ticket item thus jacking up deficit by 0.3 percent of the GDP on per annum basis for making the country stable and peaceful.

Ruling out the possibility for withdrawal of bearer bonds, the minister said that the government would launch another registered bond in the range of Rs80,000 to Rs100,000 next fiscal year 2017-18.  He again offered the political parties for reaching a consensus on the charter of economy and said that there was a need to decouple politics from politics.

“It is not an illusion but as a reality that Pakistan can enter into the comity of G-20 countries by 2030. Pakistan’s economy will be ahead of Canada and other countries. We should forge unity and give one agenda and roadmap on economy but it requires decoupling of economy with politics. We should not play politics on economic issues,” Federal Minister for Finance Ishaq Dar said in a post budget seminar organised by the Jang Group here at Iftar-cum dinner on Thursday.

The minister said that the FBR’s revenues went up from Rs1,946 billion to Rs3,500 billion from 2012-13 to 2016-17, registering an increase by 81 percent. Now the FBR’s target is aimed at crossing Rs4,000 billion thus 20 percent growth in revenues of the FBR will be achieved on per annum in five years period and will double the FBR’s collection, added the minister. In a fiery speech, the minister said that the budget deficit was slashed down from 8.8 percent of GDP to 4.2 percent of GDP for the upcoming financial year despite increasing social safety net allocation from Rs40 billion to Rs120 billion, meeting requirements of TDPs and security arrangement by utilising Rs100 billion per annum and increasing development expenditures by allocating highest ever amount of Rs1,001 billion for 2017-18.

He said that the government took taxation measures to net Rs87 billion additional revenues as the FBR imposed taxes of Rs120 billion and provided relief of Rs33 billion, so net additions is aimed at Rs87 billion.

 The minister said that budget deficit was slashed down by 50 percent through stringent financial discipline and doing away concessionary SROs that fetched R300 billion into the national kitty in last three years. He said that the opposition had staged drama outside Parliament, but they could not find out any fault in our presented budget. He said that they had presented a balanced budget and would be ready to rectify anything if someone presented good suggestion in the windup speech.

He said that there were apprehensions that the government would open coffers of kitty on eve of upcoming election in this budget, but he had made it clear that he would not let anyone to evaporate hard earned gains.  He said that the budget deficit went up by 0.3 percent because of TDPs and military operation against militants, so actually the deficit would be standing at 3.9 percent against projection of 4.2 percent for outgoing fiscal year.

The development expenditures, he said, increased from Rs336 billion to Rs715 billion for outgoing fiscal and allocated Rs1,001 billion for the next financial year. The agriculture credit, he said, was aimed at Rs1001 billion for 2017-18.

Regarding dwindling exports, the minister said that the exporters would have to increase their exports by 10 percent from July this year in order to get duty draw back facility in the range of 5 to 7 percent, so it was expected that the exports would touch $24 billion from existing level of $22 billion. “We should target to fetch $30 billion exports, he added.

The minister reminded that Pakistan was on verge of collapse when the PML-N led government assumed reins of power after winning 2013 elections. At that time many international financial institutions were predicting about the default of the country by June 2014 as the SBP foreign currency reserves had nosedived to $4 billion in real terms. 

The government, he said, undertook tough reforms by implementing manifesto on the basis of which their party had contested the last general elections. He recalled that Pakistan was known as two tranche country, but the country graduated from the IMF programme by implementing 12 levels of reforms. 

The first and foremost target was to restore macroeconomic stability, he said and added that the country was used to achieve growth in the range of three percent in last five years from 2008 to 2013, but the government in last four years achieved four percent growth and then crossed 5.28 percent mark for outgoing fiscal year.

On energy sector, he said that Pakistan possessed 1,200MW surplus electricity in 1999 when they were negotiating with neighboring country to export it, but in last 14 years, the lack of planning, vision and non implementation caused a deficit of 6,000MW. “We will end loadshedding now,” he added.

Inflation, he said, used to remain 12 percent on average which was now brought down to 4.07 percent for first 10 months of the current fiscal year. He said that the remittances increased close to $20 billion in outgoing fiscal from $13.3 billion per annum and exchange rate remained stable. The per capita income has gone up by 22 percent in last few years.

He said that public debt was not unsustainable as it stood below 60 percent of GDP. “Let’s work together to make Pakistan stronger on economic front,” he concluded.   On this occasion, acting SBP Governor Riazuddin made it clear that there was no possibility to do away with Rs5,000 currency note and cited example that making of medicines could not be stopped on this pretext that some dacoits were also using these medicines. “The rupees 5,000 note will continue,” he added.

The agri credit, he said, would be targeted at Rs1,000 billion. He said that the new taxation policy announced in the budget would reduce the cost of doing business and increasing competition among the formal sector of the economy.

He said that the financial inclusion strategy would be implemented as SMEs and agriculture credit would be incentivised in months and years ahead.

The current budget, he said, was part of continuation of fiscal policies pursued by the incumbent regime as it aimed at providing incentives to export and farm sectors. The government has increased development funding and reduced cost of farming community by reducing tax burden on fertilizer and other inputs. He said that the growth depended upon monetary and fiscal policies and consistent economic policies helped achieving economic revival with persuasion of prudent policies.