Next budget to be austerity oriented: Hafeez Shaikh

ISLAMABAD: Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Dr. Abdul Hafeez Shaikh here on Saturday said that the upcoming budget would be austerity oriented.

Addressing a press conference in Islamabad, Hafeez Shaikh said that country was on the brink of economic disaster when Pakistan Tehreek-e-Insaf (PTI) came into power and added that the current government taken significant measures to boost economy.

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He said that the economy had lost growth momentum and inflation was on the rise in the country. The advisor said foreign reserves stood at less than $10 billion dollars and exports in last five years registered zero percent growth.

He said that the current government inherited Rs.31000 bn as domestic debt and foreign loans were hovering around $100 bn. Trade deficit was around $20 bn while fiscal deficit had reached at a staggering amount of 2300 billion rupees.

Giving details about the measures taken by the current government to put the economy on the right direction, the adviser said that $9.2 billion dollars were raised by the friendly countries.

Secondly, interest rate was increased to control inflation and thirdly the government decreased imports by slapping duties on it, the advisor said.

He further said that trade gap was reduced by $ 4 bn and circular debt was reduced from $38 bn to $ 12 bn per month.

Sheikh said that economy would be in stabilization mode over next six to twelve months before moving in the phase of recovery and high growth.

Talking about the next steps of the government, Dr. Abdul Hafeez Shaikh said IMF board will give approval in next few weeks to the staff level agreement signed earlier with Pakistan.

The adviser said, “Signing a programme with IMF will also send good signal worldwide that Pakistan is managing its economy in a disciplinary fashion.”

He said the asset declaration scheme introduced by the government would give a chance to people to declare their hidden assets at a very reasonable rate and become part of formal economy.

The advisor said that $1.2 bn deferred loan facility of IDB would also start from next year and would improve confidence on our economy.

For revenue mobilization, he said, a target of 5550 billion rupees target would be set for FBR.

He said 350 companies are paying 85 percent share of tax in Pakistan and added that only two million Pakistanis file taxes and out of which 1.4 million are salaried. The advisor said new data sources will be explored to identify potential tax payers to bring them into tax net. He said data of 150,000 Pakistanis has been obtained from 28 countries and it will help determine the tax evaders. He said a sum of 46 billion rupees will be reserved for development in erstwhile FATA.

Shaikh said, “A subsidy of Rs.2 bn has been given be the government to provide relief to people in Ramazan and additional 30 billion rupees will be earmarked for food subsidy in next budget.”

He said Kamyab Jawan is another program of the government that with a budget of 100 billion rupees will enable youth to start their own businesses.

Agriculture will be given special focus in next budget for employment generation, the advisor said and added that in next budget private sector would be motivated to create jobs by giving them tax breaks on new hiring.

He said, “PSDP of 925 billion rupees is being given to planning ministry to complete the ongoing development projects.”