Govt to boost uplift expenditure by 40pc in FY22, says Tarin

ISLAMABAD: Finance Minister Shaukat Tarin said Pakistan plans to boost spending on large infrastructure projects by as much as 40 per cent to create jobs and foster productivity in an economy crippled by the coronavirus pandemic.

In an interview with Bloomberg published on Friday, the minister said the federal government would earmark as much as 900 billion rupees for development expenditure in the year beginning July 2021. “The economy needs to expand by five per cent next year,” he said. “That’s the bare minimum we need for a country this size,” added Tarin, who is due to present a new budget next month.

Tarin, a former banker, was appointed last month as the fourth finance minister since Prime Minister Imran Khan’s government took power in 2018. He also served in the role between 2008 and 2010, helping the nation avoid default by securing a bailout from the International Monetary Fund.

Tarin’s plan would reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimated to be a little above seven per cent of gross domestic product in the current fiscal year through June, against 8.1 per cent in the previous year, the Bloomberg reported.

Tarin said he expected the deficit in the next fiscal to be 1 or 1.5 percentage points lower. While balancing the budget would be key for Pakistan’s current $6 billion loan program with the IMF, the new finance minister was negotiating with the organisation for more wriggle room to support economic growth, it reported.

The government’s gross development product target for next year was a percentage point higher than the IMF’s four per cent projection, and Tarin was seeking to boost growth to six per cent in the year after, it said. “We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”

The central bank, which has cut interest rates to a three-year low to support the economy, has been on pause mode for a while and has left some of the heavy lifting to the government. “First we have to get more revenues,” Tarin said, adding that he was targeting about six trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”

On talks with the IMF, he said: “All we are saying is that we are just basically going to give them alternate ways of achieving the same objective,” including revenue generation and reducing energy debt, adding, “the aim is for this to be the last IMF bailout in Pakistan’s history”.

Tarin said his government plans to tap undrawn allocated funds from Asian Development Bank and World Bank that total $20 billion, adding that it also aims to increase tech exports to $8 billion in two years, from an estimated $2 billion this fiscal year, a sector he said that he aims to support. He said the government also plans to soon launch a global sukuk bond.