2021-2022: Govt predicts 4.8pc growth

ISLAMABAD: While clearing national development outlay of Rs1,900 billion and GDP growth of 4.8 percent for next fiscal year, Minister for Planning Asad Umar said that the government would have to bear a political cost if it failed to achieve sustainable growth.

The Annual Plan Coordination Committee (APCC) Friday cleared Rs1,900 billion national development outlay, including Rs900 billion federal development budget and Rs1,000 billion for provincial outlay for the upcoming budget.

Besides, the APCC also approved the launching of Rs1,000 billion projects by making Public Private Partnership (PPP) fully operational from the next budget. For this purpose, the government has allocated funds of Rs60-70 billion for the Viability Gap Fund (VGF) to finance projects through the PPP mode for making them commercially viable.

The APCC approved macroeconomic target and envisaged the GDP growth rate of 4.8 percent against the Ministry of Finance projection of 5.02 percent for the next fiscal.

Addressing a news conference at Pak-China Friendship Centre along with Chief Economist and Planning Commission’s Macroeconomic Chief Zafarul Hassan Almas, Asad Umar conceded that the whole system got choked because of fear of National Accountability Bureau (NAB) so there was need to pass legislation to amend this law by excluding public servants and businessmen from its domain. He said that earlier they did not have majority but now amendment into NAB law should be passed from both houses of Parliament and if required joint sitting of the Parliament should approve such amendments.

“The PMLN growth model was flawed where GDP growth was achieved at 5.5 percent in 2017-18, but it created imbalances by hiking current account deficit beyond $20 billion and budget deficit at unsustainable levels. Now we will achieve higher growth without creating imbalances. There will be no upward trend in throw forward amount because they included new projects having digestion period of 2 to 3 years only,” the minister said.

Asad Umar said the government has projected current account deficit at 0.7 percent of GDP, equivalent to $2.3 billion in next fiscal year. He recalled that he had predicted in February 2019 that two years would be required to achieve stabilisation and then supposed to return towards growth trajectory from third year, and same had now happened. He said that the higher GDP growth could only be sustainable if there would be no imbalances on internal and external account of national economy.

The minister conceded that inflationary pressures and lack of absorptive capacity for utilising development funds were the challenges for the government.

The APCC proposed Public Sector Development Programme (PSDP) at Rs900 billion for coming budget against Rs650 billion allocation in the outgoing fiscal year, which is 38 percent higher. This include foreign aid of Rs101 billion. The projects with 80 percent expenditures have been proposed to be fully financed for completion by June 2022. The government has proposed allocation of 57 percent allocation for infrastructure sector as the allocation stands at Rs509.2 billion. The government has allocated Rs103.555 billion foe energy sector, Rs99.4 billion for water, Rs265.345 billion for transport and communication including Viability Gap Fund (VGF) and Rs40.939 billion for physical planning and housing sector in the upcoming PSDP.

For social sector, the government proposed allocation of Rs169.710 billion for upcoming budget as it allocated Rs28 billion for health, Rs5.128 billion for education and training, Rs37 billion for Higher Education Commission (HEC), Rs15.261 billion for environment, Rs5.139 billion for manpower and employment, Rs74 billion for sustainable development goals (SDGs) as this programme was run by PM’s discretionary funding through parliamentarians and Rs5.179 billion for other projects.

The government has also allocated Rs5.746 billion for governance projects. It proposed allocation of Rs29.396 billion for science and information technology out of which the allocated fund for science was proposed at Rs12.204 billion and Rs17.191 billion for IT sector.

The government proposed allocation of Rs3.473 billion for industries and Rs12.032 billion for food and agriculture sector. The government also earmarked Rs37.407 billion for other requirements without mentioning any sector indicating that the discretionary funds will be allocated keeping in view the requirements during the course of next fiscal year.

Meanwhile, Minister for Finance and Revenue Shaukat Tarin said the current upward trend in inflation was due to an increase in food prices. He said inflation would start coming down from July this year.

In an interview, the minister said that Pakistan was currently importing wheat and pulses, which led to a price hike. He also attributed increasing inflation to huge tariff margins between farmers and wholesalers, saying that huge exploitation was going on which should be curtailed.

He said that the government plans to take administrative measures and build storages for creating strategic reserves of five basic commodities to check exploitation by hoarders by flooding the market when there is a shortage of any item.

In addition, he was of the view that there would be a base effect on inflation during the months of July, August, and September as the inflation was witnessed very high during the same months of last year. In addition, he expressed the hope that international food prices, which currently are very high, would also come down and help ease inflation.

The minister said that the government did not intend to impose any new taxes during the upcoming fiscal year (2021-22) rather it would broaden the tax base with the use of technology to reach unreachable areas and enhance revenues.

The minister reiterated that the International Monetary Fund (IMF) programme was very tough for Pakistan. To a question about decreasing tax slabs from 11 to 5, the minister said a plan was underway to rationalise these but said the number would not come down to 5.

He also reiterated that harassment by the Federal Board of Revenue would be eliminated and a universal self-assessment strategy would be adopted which could be subjected to third party audit, adding that a special team would be established to go after tax evaders.

To a question, the federal minister said that government would fulfil requirements of defence in the upcoming budget. He said both Pakistan International Airlines and Pakistan Steel Mills would be restructured and thereafter sold.