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Islamabad

June 7, 2017

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Consolidating underpinnings of Pak economy

A perspective on Budget 2017-18

The PML-N government has presented its 5th Fiscal Budget. The budget primarily focuses on development, widening the tax base, debt servicing, defence allocation, Public sector development, providing relief to general masses and increase in salaries and pensions of government servants. The government has strategised to increase real GDP growth upto 6%, investment to GDP 17%, development budget of Rs1,001 billion, inflation below 6%, budget deficit at 4.1%, tax to GDP ratio at 13.7%. FBR revenues are targeted to increase by 14% while the federal expenditure will grow by 11% and non-tax receipts to increase by 7%. The total size of the federal budget expenditure has been estimated at Rs4.753 trillion for the fiscal year 2017-18 which is 8pc higher than Rs4.395trn budget estimates for the CFY 2016-17. This would include a public sector development programme of Rs1.001 trillion, almost 40pc higher than CFY2016-17 revised estimate of Rs715bn.

In the Budget 2017-18, the FBR taxes have been estimated at Rs4.013trn or Rs492bn higher than revised estimates for the current year. Non-tax revenue is estimated to rise by 2pc next year to Rs980bn from current year's budget estimates of Rs959.5bn. Tax revenue for the next year has been set at Rs4.33trn, up 9.5pc over current year's Rs3.956trn. The budget deficit for the next year has been estimated at 4.1pc of GDP (Rs1.480trn).

Sixty-seven percent of the development budget of Rs1,001 billion will remain focused on infrastructure. The government reported better tax collection over the year with an improvement of nearly 80 percent compared to the previous year. Taxation targets have increased to over Rs4,000 billion. There has also been a 10 percent increase in salaries for federal government officers and a ten percent special allowance for army officers. Defence allocation is Rs920.2 billion. Debt servicing allocation is Rs1363 billion. The size of PSDP for 2017-18 is Rs2,113 billion. Out of this, Rs1,112 billion has been allocated to provinces. This clearly indicates that government plans development and more development which is good for the country. It would help in reducing poverty, creating new jobs.

The economic survey of 2016-17 also clearly indicates that the economy of Pakistan is on upward trajectory. GDP for the year was 5.28 percent which is the largest in the country experienced in the last 10 years. The inflation has also been contained at 4.4 percent. The industrial and services sectors continue to boom, with both registering growth of more than 5 percent and the service sector now contributes to 60 percent of our total GDP. The total volume of the economy had crossed $300 billion for the first time. This all shows that Pakistan is on the path of development. A number of development projects are also giving impetus to our economy. Government's economic policies are paying dividends and our country is prospering economically. There are estimates that if the economy continues to grow with the same pace, Pakistan would be in G-20 countries and it would be ahead of economic powers like Italy and Canada.

It is high time that our political leaders decouple politics from economy. The economic policies should be continuous and consensual. We need to think above politics with regard to dealing economic planning of our country. Ishaq Dar is right when he offers to the opposition parties that they should sit together with the government and chart out economic plan-budget priorities for 2018-23. It is also the prerogative of the elected governments to make the budget in the intervening period of two governments and the best option would be if all major parties decide this before completion of this government's tenure. Interim government is supposed to run day to day affairs. After all, it is the mandate of elected representatives to finalise budget of a country. Political parties should reciprocate government positively on this and that is under the legal and constitutional framework. In the past, there had been the worst crisis due to lack of economic coordination. Each successive government uprooted the economic planning of its predecessor which had reprehensible impact on our economy.

Government is committed to provide relief to common man. The government has allocated a handsome amount of Rs121 billion in its social safety network, BISP. A number of other relief measures have been taken in this budget too. The government employees have been given the raise of 10% in their salaries. Armed forces have been given an additional 10% allowance. Our armed forces deserve so; they are laying their lives in the fight against terrorism for the safety and security of whole nation. Almost 25,000 troops and officers have embraced Shahadat in this fight to purge our land from the scourge of terrorism and equal number of soldiers has been maimed.

Prices of the commodities have remained stable. Government is also providing a lot of subsidies to the common man. Per capita income has also reached to $1,629. Pakistan is on the cusp of a high growth trajectory. Our foreign exchange reserves are sufficient to cover four months of imports, tax revenues that have increased by 81pc and a fiscal deficit at 4.2pc as a revival in growth gets underway.

Present government is consolidating the underpinnings of our economy. Over the last four years, economy has improved tremendously. The prudent financial policies of this government have provided relief to the common man and helped in developing the infrastructure. Various energy projects initiated by this government are completing soon and would help in overcoming the shortage of electricity in Pakistan. Mega projects like CPEC would help in creation of jobs and other investment opportunities. By and large, the government has taken every possible step for uplifting economy of Pakistan and that is paying now. Hopefully, Pakistan's future is bright and its economy would be stronger and stronger by every passing day. 

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