Budget deficit will be contained at 4.5% of GDP in ’11-12
ISLAMABAD: The National Assembly (NA) Standing Committee on Finance, which met at the Ministry of Finance on Wednesday, was informed that the budget deficit will be contained at 4.5 percent of the gross domestic product (GDP) in 2011-12 and thereafter further reduced by 0.5 percent annually and would be brought to 3.6 percent of the GDP by 2013-14.
Tax-to-GDP ratio estimated at 9.1 percent during the ongoing fiscal year will be raised to 10.3 percent of the GDP in the next three years (2011-14). Tax collection will be increased from Rs 1.588 trillion in 2010-11, Rs 1.952 billion in 2011-12, Rs 2.315 trillion in 2012-13 and Rs 2.713 trillion by 2013-14. The NA body met with Fauzia Wahab in the chair and was given a detailed presentation on Budget Strategy Paper 2011-14. However, members from Pakistan Muslim League-Nawaz (PML-N), PML-Quaid (PML-Q), Jamiat Ulema-e-Islam (JUI-F) and Jamaat-e-Islami (JI) boycotted the meeting. MNAs from ANP, MQM and PPP attended the meeting.
Shahid Khaqan Abbasi visited the meeting venue and did not sign the roll and left the ministry and afterwards alleged before the media that fake figures are being provided to the legislators.
Federal Finance Minister Dr Hafeez Shaikh, Finance Secretary Dr Waqar Masood Khan and other officials from the ministry explained the budget 2011-12 priorities to the committee members.
Finance Division has proposed six key budgetary measures for 2011-12 budget that include containing budget deficit at 4.5 percent of the GDP, improving tax-to-GDP ratio from 9.1 percent to 9.7 percent of the GDP, gradual elimination of Rs 186 billion power subsidy, elimination of untargeted Rs 43 subsidies and making such as targeted subsidies, zero net borrowing from State Bank of Pakistan and implementation of new growth strategy through the Public Sector Development Programme. GDP growth will be 4.2 percent in the next fiscal year and inflation will come down to 12 percent.
The federal government will continue funding to the areas such as law and order, defence and security, water and power, social safety nets, food and agriculture, macroeconomic management, human development, transport, communication and railways, trade, commerce, industry and investment, housing and works, pensions, foreign affairs, grants to provinces and grants to special areas like AJ&K, GB and FATA.
The government will further strengthen austerity measures and in this regard, independent commission will be constituted to examine the structure of pay and allowances across the public services and equity and fairness across them. Ban on new recruitment and purchase of durable goods continue to adjust surplus staff and goods of devolved ministries, rationalisation of fuel entitlement, travelling allowances and expenditure on stationary and newspapers. An independent commission will be established to scrutinise all development and non-development budget with a view to ensure their necessity.
The 18th Amendment has omitted the concurrent list and up to date 10 ministries have been devolved, the remaining staff and functions are being allocated to federal government. However, an understanding has reached with the provinces regarding spending in the devolved ministries.
In the ongoing fiscal year 2010-11, GDP growth will be 2.8 percent of the GDP, exports will cross $24 billion mark, remittances will cross $11 billion mark, foreign exchange reserves stand at $17.5 billion mark, rupee has gained strength in past few weeks. The NA body was informed that despite the economic indicators are showing improvement, six challenges still remain before the government including containing fiscal deficit, reducing inflation, overcoming energy shortages, increasing investment, providing jobs to youth and reducing public debt to provide fiscal space for the future service delivery and investment.
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