truthseeker2010
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KARACHI (January 23, 2011) : The country is facing a worsening but manageable economic situation, which requires a new economic strategy to overcome crisis, said Federal Minister for Finance and Economic Affairs, Dr Abdul Hafeez Shaikh. Talking to media persons here at the head office of State Bank of Pakistan (SBP) on Saturday evening, Hafeez said that Pakistan was not the only country, which was facing economic crisis, as many other countries of the world were also confronting with economic problems.
He said that three extra-ordinary events including rising expenses on security, transfer of over Rs 300 billion from federation to provinces under the new NFC Award, subsidy on power and the devastating 2010's floods had severely dislocated overall economic planning.
"At the start of the current fiscal year, it was felt that we are on track and economy will perform better than last year. However, during the year the floods, subsidy, security and rising oil prices have hit the government's economic targets," he added. In July last, inflation was declining and was expected to be controlled while fiscal deficit forecast was 4 percent for the current fiscal year, he said.
"We were expecting that for the current fiscal year, federal government's fiscal deficit will be 5 percent, while provinces' budget will be one percent surplus and cumulatively it will be 4 percent," he said. "However, this is not happening and to meet this target, provincial as well as federal governments are required to reduce their current expenditures and utilise excess receipts in proper manner," he added.
"Three things are necessary for improvement in economy. These include revenue mobilisation, cut on expenditures and role of provinces," the minister pointed out. He said the provinces would get Rs 300 billion to Rs 350 billion under the new NFC Award and they could help control the fiscal deficit. "Now, it is important for the provinces to come with effective fiscal management, as their responsibility on this account will grow further in future," he said.
"Federal government has no space to cut fiscal deficit due to high subsidy to power sector, rising flood and security expanses, but provinces have they should realise the prevailing economic conditions and their responsibilities," Hafeez Sheik added.
The minister said that political parties knew the government needed to take some hard steps for the betterment of country's economy, as in absence of political consensus implementation of economic policies was difficult. "The government is already negotiating with PML-N and two meeting have already held, while the third meeting will be held on January 26. Besides, we are taking other political parties like ANP, MQM, PML-Q and FATA parliamentarians into confidence to develop broad consensus on economic issues," he added.
He said that under the new NFC Award provinces would get 57 percent share against the earlier 47 percent. However, he underlined the need of proper utilisation of the additional resources by the province that was necessary for putting the economy on the right track. He further said that the federal government has so far spent some Rs 40 billion on flood affectees, while some Rs 30 billion would be spent in next six months.
He said country's exports in the last 6 months had increased by 20 percent and hoped that exports would cross $22 billion by end of 2011. More than $10 billion remittances were also expected this year, he added. He said that the task of economic recovery was not so easy, but the government was making all out efforts to achieve the target. He hoped that the GDP growth target for the year would be achieved. Governor SBP Shahid Hafeez Kardar, Deputy Chairman Planning Commission Dr Nadeem Ul Haq, Finance Secretary Dr Waqar Masood and Chairman FBR Salman Siddique were also present on the occasion.
Top Stories - Exports to touch $22 billion mark
He said that three extra-ordinary events including rising expenses on security, transfer of over Rs 300 billion from federation to provinces under the new NFC Award, subsidy on power and the devastating 2010's floods had severely dislocated overall economic planning.
"At the start of the current fiscal year, it was felt that we are on track and economy will perform better than last year. However, during the year the floods, subsidy, security and rising oil prices have hit the government's economic targets," he added. In July last, inflation was declining and was expected to be controlled while fiscal deficit forecast was 4 percent for the current fiscal year, he said.
"We were expecting that for the current fiscal year, federal government's fiscal deficit will be 5 percent, while provinces' budget will be one percent surplus and cumulatively it will be 4 percent," he said. "However, this is not happening and to meet this target, provincial as well as federal governments are required to reduce their current expenditures and utilise excess receipts in proper manner," he added.
"Three things are necessary for improvement in economy. These include revenue mobilisation, cut on expenditures and role of provinces," the minister pointed out. He said the provinces would get Rs 300 billion to Rs 350 billion under the new NFC Award and they could help control the fiscal deficit. "Now, it is important for the provinces to come with effective fiscal management, as their responsibility on this account will grow further in future," he said.
"Federal government has no space to cut fiscal deficit due to high subsidy to power sector, rising flood and security expanses, but provinces have they should realise the prevailing economic conditions and their responsibilities," Hafeez Sheik added.
The minister said that political parties knew the government needed to take some hard steps for the betterment of country's economy, as in absence of political consensus implementation of economic policies was difficult. "The government is already negotiating with PML-N and two meeting have already held, while the third meeting will be held on January 26. Besides, we are taking other political parties like ANP, MQM, PML-Q and FATA parliamentarians into confidence to develop broad consensus on economic issues," he added.
He said that under the new NFC Award provinces would get 57 percent share against the earlier 47 percent. However, he underlined the need of proper utilisation of the additional resources by the province that was necessary for putting the economy on the right track. He further said that the federal government has so far spent some Rs 40 billion on flood affectees, while some Rs 30 billion would be spent in next six months.
He said country's exports in the last 6 months had increased by 20 percent and hoped that exports would cross $22 billion by end of 2011. More than $10 billion remittances were also expected this year, he added. He said that the task of economic recovery was not so easy, but the government was making all out efforts to achieve the target. He hoped that the GDP growth target for the year would be achieved. Governor SBP Shahid Hafeez Kardar, Deputy Chairman Planning Commission Dr Nadeem Ul Haq, Finance Secretary Dr Waqar Masood and Chairman FBR Salman Siddique were also present on the occasion.
Top Stories - Exports to touch $22 billion mark
