Apparently, in agreement with the International Monetary Fund (IMF), thegovernment is setting inflation, economic growth and fiscal and coredeficit targets for the next financial year, following a change in theeconomic team and encouraging macroeconomic indicators.
According to the report, a government team in a meeting of theparliamentary committee said that the growth rate of gross domestic product(GDP) for the next financial year has been set at 5% instead of 4.2%, whichwas also approved by the federal cabinet on April 13.
Inflation is projected at 8.2 per cent instead of 8 per cent, while theoverall budget deficit has been increased from 6 per cent to 6.3 per centof GDP, while the basic deficit is projected at 0.6 per cent instead of 0.1per cent.
A revised Medium Term Budget Strategy Paper (BSP) was presented to theNational Assembly’s Standing Committee on Finance by a team from theMinistry of Finance and the Federal Board of Revenue.
According to the paper, the public sector development program for the nextfinancial year has been increased from Rs 8 trillion last year to Rs 9trillion.
The committee, comprising members of the ruling opposition, questioned theeconomic estimates and said similar arguments and objectives had been putforward by different governments.
This was also evident from a presentation in which the budget estimatedinflation at 6.5 per cent, which had risen to 9 per cent, and the budgetdeficit estimate at 7 per cent, up from 7.2 per cent last year.
The Special Assistant to the Prime Minister for Finance and Revenue saidthat some changes have taken place since the approval of the budgetstrategy paper by the federal cabinet, including an encouraging growth rateof 3.94% of GDP.
He said that austerity is required while staying in the IMF program. Theprocess of expansion is also under consideration by the government. Thegovernment is working closely with the IMF on the current budget.
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He also said that the IMF Managing Director has been asked for someconcessions for financial expansion in the wake of the third wave ofcoronavirus to take steps to help curb food and energy inflation.
The BSP estimates that the revised volume of GDP for the next financialyear will be 81.4% of the GDP growth rate on the basis of Rs. 54,341billion as against Rs. 52,462 billion in the previous fiscal. But was 84.3%.
Similarly, in view of high import requirements, the current account deficitis likely to be 4 4.8 billion, which was earlier estimated at Rs 4.70billion.
Finance Secretary Kamran Afzal said that energy sector subsidies would befurther targeted to clear revolving loans and according to the actualestimate of the power division, it would be increased to Rs 5 billion.
In addition, the payment of dues of Independent Power Producers will reducethe revolving debt by Rs. 4 trillion while the remaining Rs. 4 trillionwill be reduced through non-cash adjustments between the government and itsagencies.
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