New Growth Strategy for Pakistan - Updated Draft comes out

[ajpirzada]

ajpirzada,

was checking out the income tax rates in pakistan and i wondered why is it that no one ever paid a revisit there?

someone who's annual income is 12,00,000pa just pays a meager income tax of 10% and some one who is earning less has tax rates which keep getting negligible as the annual salary drops but interestingly the returns given on savings in a bank hover around 14% and when the two get compared it comes across as a ridiculous expense hitting the banking system hard until and unless the govt is subsidizing this rate which is again is not advisable considering the economic health pakistan finds it self in, and till the time the income doesnt exceed 19,50,000pnr till then it is not just the elites who are taking the system for a ride but almost most of pakistan's middle class as well who also happen to be the biggest critics of all the problems faced by pakistan on the economic front, it was time they were made a part of the solution than a lot which only knows to crib.

this is stupendous source of generating revenue for the government and i am sure you chaps must have thought about this but may be it is time that someone took a call where income tax slabs were no more 0.5, 0.75, 1.5 so on and so forth which by any standards are ridiculous especially in times as faced by pakistan but atleast 5-10-15-20 (all the figs in %).

i understand you people face the huge challenge of inflationary pressures but doesnt not mean revenue generation mode be let off.

ya thats a gud question. I dont know exactly. Ill check with the right person and see if she is doing something about it in her background paper for the growth strategy.

the growth strategy document is still going through the development stage and is open to comments.

thanks for raising the issue.

 

[muse]

In other words the foreigner will fund specific projects in which they can be told has a high degree of local ownership - screw central planning, the money's more or less free, so, well, you know... come with empty pockets and leave with them full - Hey give the Awaam what they want and if they want the finger, why stand in their way?

couldnt understand......

Saave?? Comprendo? Samj aahi?

projects approved under PSDP are funded by external inflows such as loans, aid etc.

So what is that you don't understand in this ? The money is free and will go to funding projects based on criteria - the key criteria will be local buy in or what is going to be sold as local buy in.

BTW, did you read about the projected deficit - One trillion Rupees --- to be financed, how? If you have a better understanding please do educate me.

 

[ajpirzada]

couldnt understand......

even i dont understand that.

BTW, did you read about the projected deficit - One trillion Rupees --- to be financed, how? If you have a better understanding please do educate me.

i think its around 3.5 trillions. and i have got no idea how this will be funded. and i keep asking that why do we approve new projects when the old ones can never be completed.

the only possible was is if government gets out of the market let the market decide which projects to do and which not. as per the projects which directly concern the have nots, government should only concentrate on them.

 

[muse]

AJP


Sorry about that, let me offer a clear picture -- my post was in response to your "couldn't understand" and what I was suggesting was that since the funding for projects is going to foreign, the foreigners will have some criteria, the most important among them will be the degree of "local buy in" and that projects will be sold the the foreigners in that way - either way, the bureaucrat and vested interest win

 

[ajpirzada]

 

[ajpirzada]

NEC approves Rs 730 billion PSDP: Hafeez Shaikh
ISLAMABAD, May 28 (APP): Minister for Finance and Economic Affairs, Dr.Abdul Hafeez Shaikh said on Saturday that the National Economic Council (NEC) has approved Rs.730 billion for Public Sector Development Programme (PSDP) 2011-12 with focus on social and infrastructure sectors development and completion of ongoing projects to benefit people of the development projects and economic prosperity of the country.
He was briefing the newsmen on the decisions of the NEC which met here under the Chairmanship of Prime Minister Syed Yusuf Raza Gilani today.
Dr.Shaikh said that the NEC also approved the new growth strategy which was prepared and presented to the Council by the Planning Commission focusing on enhancing economic growth rate, and create job opportunities to the youth in the country.
“Out of total PSDP-2011-12 allocations approved by the NEC the Federal share is Rs.300 billion while 430 billion will be the provincial share which is 58 percent higher than last fiscal year”, he remarked.
Deputy Chairman Planning Commission Dr. Nadeem ul Haq, Secretary Planning Division Sohail Ahmed, Secretary Information Taimur Azmat Usman, PIO Muhammad Saleem and senior officials of Ministry of Finance and Planning were also present in the briefing.
Minister for Finance and Economic Affairs Dr.Abdul Hafeez Shaikh said that during the outgoing Financial year 2010-11 the federal PSDP share was Rs.290 billion including Rs.10 billion for Earthquake Rehabilitation and Reconstruction Authority (ERRA).
He said that federal share was reduced to Rs.196 billion due to last years devastating floods.
He added that the provincial share was Rs.424 billion which was also reduced to Rs.266 billion so the total PSDP was amounted to Rs.462 billion.
The Minister for Finance said that NEC for the forthcoming Financial year 2011-12 has approved Rs.730 billion with federal share of Rs.300 billion.
He said that this significant point for this year’s PSDP has been focused on three main areas including early completion of projects which are now in the advanced stages, speedy completion of foreign funded projects and balanced development of all area including Azad Kashmir, Gilgit Baltistan, FATA and Balochistan will be given importance in the development project execution.
Dr. Hafeez Shaikh said that projects of national economic importance like Diamer Basha dam would be given top priority in the PSDP 2011-12 for the economic development of the country.
The Minister said that to meet the development projects government would enhance its revenues through bringing more people in the tax net who are not paying their taxes.
He said that government believes in transparency, therefore he has directed the Planning Division to publish the details of all the projects including the completed projects as well as those initiated by the government for the welfare of people of the country.
He asked the people to bring to the notice of the government if any development project has not been completed so that they should know that their tax money has been utilized properly.
Highlighting the sectoral allocations in the PSDP-2011-12, the Minister said that for Infrastructure Rs.155 billion has been earmarked while for Social sector Rs.122 billion has been allocated and for other sectors Rs.23 billion has been approved.
“Our focus in the PSDP-2011-12 would be on infrastructure and social sector development to improve the living conditions of the people”, he remarked.
Dr Hafeez Shaikh said that the government has adopted a number of measures for reducing and controlling its expenditures.
He said that the GDP growth would be between 2.4 to 2.5 percent.The Minister said that the Planning Commission has initiated new growth strategy which will help enhance economic growth by 6-7 percent in coming years and create employment opportunities to the youth.
He reiterated that the government would not remain in the business and only play the role of a facilitator and regulator for the private sector development in the country.
He added that the cities would be developed as engine of growth and under the new growth strategy assets management would be given priority.
He hoped that under the new growth strategy the GDP growth would be enhanced to create job opportunities.
Speaking on the occasion, Deputy Chairman Planning Commission, Dr.Nadeem Ul Haq said that the economic growth would be enhanced through Public-Private Partnership (PPP), restructuring and privatization of national assets.
“We do not want to see losses to national assets/entities, which will be restructured by improving their management and involving professionals”, he remarked.
He said inflation in the country was currently 15 percent and the average inflation rate would remain 12 percent for the next year which would be further brought down to 8 percent by the end of next financial year.

Associated Press Of Pakistan ( Pakistan's Premier NEWS Agency ) - NEC approves Rs 730 billion PSDP: Hafeez Shaikh

 

[ajpirzada]

Bureaucrats opposing Growth Strategy due to proposed civil service reforms


Cabinet silently approves 7m pound DFID grant

Mehtab Haider
Sunday, May 29, 2011


ISLAMABAD: The federal cabinet in its meeting held with Prime Minister Gilani in the chair on last Friday, silently approved 7 million pounds grant agreement from UK-based Department for International Development (DFID) to develop Pakistan’s Growth Strategy, as this grant agreement had become bone of contention among top hierarchy of bureaucrats and technocrats of PPP-led government, it is learnt.

The federal cabinet also asked the authorities for not submitting such grant agreement before this top level forum in the future, as these matters should be resolved at level of concerned ministries.

After getting federal cabinet’s approval on grant agreement, the Planning Commission Saturday submitted its Growth Strategy before the National Economic Council (NEC), the highest economic decision making forum, and successfully got its approval in principle. The NEC also directed the authorities concerned to come up with ‘implementation plan’ in consultation with other federal ministries and provinces in next four months period.

When contacted top official of economic ministry said that Ministry of Law had recommended the concerned ministry to table DFID’s grant agreement before the federal cabinet because it had turned into bone of contention within the economic ministries.

After getting divergent views, it was learnt that a committee comprising top bureaucrats of economic ministries was formed to decide the fate of this grant agreement and it remained mystery as to what was the outcome of secretaries’ committee’s deliberations.

But a top official confided to The News that Ministry of Law was consulted for seeking legal point of view after which the decision was taken to refer this thorny issue to the federal cabinet.

The bureaucrats, who were opposing this grant agreement of 7 million pounds, were of the view that some stringent conditions were attached to this grant agreement so they were opposing to ensure binding of all agreements of multilateral creditors through signing of this grant agreement for the sake of only 7 million pounds.

But the technocrats especially Deputy Chairman Planning Commission Dr Nadeem-Ul-Haq had pursued hard to clear this grant agreement by arguing that the newly developed growth strategy envisaged paradigm shift by focusing more on software of growth instead of relying on hardware of growth, as the old model of growth remained unable to achieve higher growth on sustained basis. The sources said that the newly developed Growth Strategy had opposed perks and privileges of bureaucrats and recommended the government to monetize them.

The approved strategy for Growth by NEC states “perks to BS-20 and above alone cost the government Rs4.7 billion annually. Add to this the administrative expense and the figure will easily reach Rs6 billion. Once monetized, the cash pay per officer will increase significantly but annual cost to government will reduce from Rs6 billion to Rs3.1 billion.

“This is the basic reasons that’s why the bureaucrats are opposing this Growth Strategy,” said a senior official of Gilani government. However, according to the sources in international donors, the DFID has agreed with World Bank to manage 7 million pounds on their behalf and the Bank would charge fee from them for extending its expertise.

In first year after signing of grant agreement, the DFID would provide one million pounds to come up with clear cut implementation strategy for having complete agreement among all stakeholders on civil service reforms, elimination of subsidies, cutting down losses of public sector enterprises and moving ahead with privatization plan after which the remaining 6 million pounds would be disbursed by the UK’s DFID.

Cabinet silently approves 7m pound DFID grant

---------- Post added at 09:37 AM ---------- Previous post was at 09:37 AM ----------

Final version of the Growth Strategy as approved by the Prime Minister of Pakistan. Follow the link:

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