Upcoming budget: Ambitious govt hopes to achieve 5.1% growth

[Edevelop]

ISLAMABAD: The federal government may announce a Rs3.744-trillion budget outlay for the next fiscal year with an ambitious economic growth rate of 5.1% that is expected to be achieved through the completion of unfinished economic reforms agenda in the second year of the Nawaz administration.

The budget framework for fiscal year 2014-15 revolves around the pillar of restricting the overall budget deficit at 4.8% of Gross Domestic Product – or Rs1.4 trillion – aimed at continuing fiscal consolidation during the second year.

The deficit will be filled by borrowing from domestic and external sources.

Attainment of the 4.8% target will hinge on the ability of the four provinces to save over Rs110 billion out of their shares in federal receipts, which they will receive from the federal government, officials said. By excluding provinces’ surpluses, the federal budget deficit will be 5.2% of GDP, they explained.

Meanwhile, the tax revenue target is to be set at Rs2.801 trillion, non-tax revenues’ target at over Rs675 billion, and the petroleum levy target is expected to be over Rs125 billion. The tax target will be 23.5% higher than this year’s twice-downward revised target of Rs2.27 trillion, while the non-tax revenue will be lower than this year’s.

Officials said gross federal receipts are likely to be around Rs3.6 trillion. Out of that, the provinces are expected to get about Rs1.7 trillion, including straight transfers, as their share in federal taxes, leaving the federal government with a net income of Rs1.9 trillion.

The proposed budget outlay is Rs158 billon higher than the Rs3.591 trillion budget of the outgoing fiscal year, according to Ministry of Finance officials. The planned budget expenditure was shared with the federal cabinet on Thursday, while discussing the Budget Strategy Paper.

The government seemed to have more trust in bureaucrats than the cabinet ministers, as after the meeting, the strategy paper was taken back, two federal ministers confirmed to The Express Tribune.

Finance Minister Ishaq Dar briefed the cabinet ministers about the economic achievements in the first year of the government.

Officials said the budget will be presented with an objective to increase the tax base through the withdrawal of Statutory Regulatory Orders, cutting power subsidies and deepening economic development.

The government will announce development schemes under the Pak-China Economic Corridor project, according to officials. Out of Rs525 billion proposed development budget, the government is considering to set aside Rs100 billion for new initiatives, including Lahore-Karachi motorway, building jetties and roads to link China with Gwadar.

The government will set 5.1% economic growth rate target for the next fiscal year, they informed. The inflation target is likely to be set around 7.8% to 8% that will be achieved by controlling expenditures and ensuring price stability.

As a price stability measure, the government is expected to keep the rupee-dollar parity at Rs99 to a dollar aimed at avoiding the rupee-deprecation impact on prices of electricity and petroleum products.

Because the government could not achieve the goal of increasing FBR’s tax-to-GDP ratio to 9.5% this year, it has decided to introduce reforms during the next fiscal year. It will announce the aim of bringing in 100,000 people in the tax net – a goal that it could not achieve this year. The main focus of the government will be on withdrawing tax exemptions.

On the energy side, officials said the government is expected to allocate over Rs190 billion in power subsidies, which are lower than this year’s revised estimates of around Rs300 billion.

For paying fertiliser subsidies, Rs25 billion may be allocated while Rs35 billion will be given in subsidies to Pakistan Railways, officials told The Express Tribune.

For servicing the domestic and foreign debt, the government is considering allocating Rs1.29 trillion next year. Meanwhile, the defence budget is expected to be around Rs690 billion, according to officials.

An amount of Rs294 billion is expected to be allocated for running the civilian government.

Upcoming budget: Ambitious govt hopes to achieve 5.1% growth – The Express Tribune

 

[farhan_9909]

Not bad considering in how much bad the economy was.

If 5.1% for next year than we can hope of more than 6% for 2016

 

[Chak Bamu]

We can not hope to go beyond 5% without having better energy availability. Forget 6% until we manage load-shedding to less than 3 hours.

I think we can see more than 6% GDP growth in 2016-2017 if Neelum-Jehlum, Chashma II & IV, other Hydropower projects (Alai Khawar, etc...), and at least 6 new coal-power projects come on line in addition to improvements in older thermal plants. Tarbela power extension projects would have a most welcome, but temporary (3 months in a year) impact.

 

[SBD-3]

We can not hope to go beyond 5% without having better energy availability. Forget 6% until we manage load-shedding to less than 3 hours.

I think we can see more than 6% GDP growth in 2016-2017 if Neelum-Jehlum, Chashma II & IV, other Hydropower projects (Alai Khawar, etc...), and at least 6 new coal-power projects come on line in addition to improvements in older thermal plants. Tarbela power extension projects would have a most welcome, but temporary (3 months in a year) impact.

The bigger problem is when industrial energy is diverted for consumption. The public politics forces the government to trade off growth for political calm.

 

[Hyde]

We can not hope to go beyond 5% without having better energy availability. Forget 6% until we manage load-shedding to less than 3 hours.

I think we can see more than 6% GDP growth in 2016-2017 if Neelum-Jehlum, Chashma II & IV, other Hydropower projects (Alai Khawar, etc...), and at least 6 new coal-power projects come on line in addition to improvements in older thermal plants. Tarbela power extension projects would have a most welcome, but temporary (3 months in a year) impact.

I was about to mention the same projects.. see the projects you mentioned are almost about to be completed + there are more small hydro power projects in the country that will be completed within the next 12-24 months.

Tarbela extension project may take another 3 years but see Neelum Jhelum and many small dam's such as Allai Khwar, Golen Gol, Chashma Nuclear reactor, Wind/Solar projects and 3-5 coal fired plants should be active within the next 2 years. So that's at least 4000MW?? of electricity on the cards.

Now that's a different thing if we use our true potential, our public can soak this electricity and the loadshedding will remain intact. But having said that, if we divert most of this electricity to industrial sector, we are talking about immense growth of the industrial sector at least.

 

[karan21]

If Pakistan achieves 5% growth, then its great given the tough issues it is facing. It seems like every year Pakistan's economic output will increase till it achieves 7-9%. It's great for the region because it will promote economic competition. BD and India will have to increase their growth rate too.

We can not hope to go beyond 5% without having better energy availability. Forget 6% until we manage load-shedding to less than 3 hours.

I think we can see more than 6% GDP growth in 2016-2017 if Neelum-Jehlum, Chashma II & IV, other Hydropower projects (Alai Khawar, etc...), and at least 6 new coal-power projects come on line in addition to improvements in older thermal plants. Tarbela power extension projects would have a most welcome, but temporary (3 months in a year) impact.

Pakistan's power problems won't be solved on it's own. You need to give impetus to entire power industry. Just building a few power plants won't solve long term issues. You have to promote investments in over all power industry which involves power grid creation, power equipment manufacturing, labour, planning and research.