Maximum relief to poor in budget

KARACHI-Federal Minister for Finance and Privatisation Syed Naveed Qamar has said that drastic cut would be made on non-development expenditure to bring down the whopping existing 29 per cent budget deficit this year to 6.5 per cent.

Addressing a Press conference after a meeting with the members of Overseas Chamber of Commerce and Industry (OCCI) and the Chief Executive of the multi-nationals here on Monday, he said that 'we will not allow the fiscal deficit to rise above 6.5 per cent this year , adding , that it will be further brought down in next fiscal year'.

There was an immediate need to check the budged deficit of 29 per cent and for this the govt had to take number of steps that would include drastically reducing non development expenditure and rationalise the development expenditure, he added.

However, he said that reducing non-development expenditure would not mean making any cut in the salaries of the govt employees. He identified a number of areas in which steps would be taken to check the budget deficit.

He said that the govt would initiate more saving schemes with high profit margins and by floating of new bond in the market, the tax base would also be broadened alongwith rationalisation of taxes/duties.

Commenting on the upcoming budget, he said that the govt will give maximum relief to the poor. The govt would give direct relief in cash or kind to those living below to the poverty line and said there are people, who will have to share some burden in this regard in the shape of taxes, he said.

Regarding negative trend that gripped the stock market for last few weeks, resulting in benchmark index lost around 2,000 points, he said the market liquidity would be strictly checked through some corrective measures from the State Bank of Pakistan and the Ministry of Finance.

About the govt borrowing from SBP, he said the govt would stop it forthwith and has options on its cards to have sufficient funds with it as he expressed his satisfaction that coming month around US$300 million as remittances from overseas Pakistanis are likely.

Talking about inflation, he said that this is caused by domestic and outside factors and the govt had planned a number of steps to control inflation.

'The govt was committed to bring economic stability at the earliest'.

He said that govt would take all the major political parties and other stake-holders on board in the making of the budget so that it was owned by all and could proof more result-oriented.

He informed the media that detail discussions with President OICCI, Waqar A. Malik and other members of the managing committee of the chamber and chief executives were held on wide range of issues relating to investment and trade. Another important issue of intellectual property rights also came up at the meeting.

He acknowledged that he had very great inputs from OICCI team and said that more interaction would be held so that the objectives of the govt and the chamber could be achieved.

In the meeting OICCI suggested the following policy directions for the forthcoming national budget and related measures:

1. Enforcing fiscal responsibility laws

2. Aggressively cutting non-development expenditure

3. Widening the tax base to include untaxed and under-taxed sectors

4. Reducing excessive taxation and cutting tariffs on items not manufactured locally

5. Curbing smuggling and under invoicing so as to protect items that are produced locally and/or imported through legal channels. This will also increase govt revenue.

6. Allowing market prices but at the same time introducing some incentives for the poorest sections of society.

7. Fast-tracking privatisation to ensure that public sector enterprises are sold in a transparent and efficient manner. At the same time ensure that the proceeds of the sales are used strictly for debt retirement and for poverty reduction

8. Increasing expenditure on health and on education with special emphasis on vocational training for skill development

9. Boosting the agriculture and manufacturing sectors

10. Aggressively targeting Foreign Direct Investment

In his remarks on the occasion, the President of the OICCI, Waqar Malik, said that FDI is needed for fuelling economic growth, for creating employment opportunities and most importantly, for maintaining currency stability and helping manage trade and current account deficits, in addition to forming local and global linkages.

He was of the view that Pakistan has long-term growth drive such as favourable demographics with 54 pc of the population below 19 years of age, in addition to a rising middle class, attractive policy and regulatory fundamentals and a strategic geo-political location.

In the short term, he recommended that the govt set up an Energy Council together with all stake-holders for suggesting ways to check the worsening energy crisis in the country.

He also pushed for holding of a joint Investment Conference later this year to attract the foreign investors back to Pakistan.

On the country's perception, he said that the OICCI believes that Pakistan drastically needs to improve its marketing strategies so as to highlight its core competencies and showcase success stories.

OICCI will continue to play its role of an Ambassador of Pakistan, he said.

Additionally, he said that tax rates in Pakistan are amongst the highest in the region and are a disincentive to business and investment. He emphasised that the forthcoming budget should focus on agriculture, manufacturing and export sectors, which must be given the right incentives to grow. The emphasis should be on controlling imports and increasing exports, he added.

These must be underpinned by a vibrant financial services market, he said.

He said that the govt should demonstrate consistency and transparency in policies and a consultative approach for foreign investors in the country.

He also said that govt should bring down inflation and interest rates and seriously implement IPR laws.