The federal government had completed four years couple of months back with an excellent record of better economic performance. Different indicators are showing marked improvement more or less and for sustaining the record economic growth so achieved. It had come up with quite realistic, doable and achievable targets for the financial year 2017-18, last year of its stipulated five years constitutional tenure.

It is a well-known fact that economy of Pakistan remains under constant review of some international financial institutions and organizations as well as donor agencies including International Monetary Fund (IMF), World Bank, Asia Development Bank, and rating agencies like Moody’s.

All these multi-national financial institutions in their periodic reviews of Pakistan’s economy appreciate rapidly forwarding moving economy. However, at the same time, they also point out shortcomings and weak points which are duly taken notice by the senior officials concerned in Islamabad and try to take corrective measures at the earliest as much as possible. Clearly, the federal government works out the budget strategy initially and then fixes targets for achievement during ensuing the financial year 2017-18, which is already in its third month, with the sole objective of sustaining the pace of progress and economic growth while accelerating developmental activities in different sectors across the country.

The economic policies and budgeting strategy have put the increase in real Gross Domestic Product (GDP) growth at 6 percent, investment to GDP 17 percent, inflation below 6 percent, budget deficit at 4.1 percent of GDP, tax to GDP ratio at 13.7 percent. Revenues of Federal Board of Revenue (FBR) have been targeted to increase by 14 percent. However, the federal expenditures will grow by 11 percent. Non-tax receipts of the federal government have been targeted to increase by 7 percent and current expenditure also known as non-development expenses will be kept under tight control. Development budget (Public Sector Development Development Programme) has been placed at the highest ever level of Rs 1001 billion. Foreign exchange reserves level will be ensured to be enough to cover imports for a minimum period of four months. The government intends to keep net public debt to GDP ratio below 60 percent of GDP and to keep continuing targeted social interventions.

How is the economic growth going to sustain and even go beyond? The answer lies in the following explanation; economic growth target for the ongoing financial year is 6 percent against 5.7 percent for the last fiscal year 2016-17. The government will be making concerted efforts for achieving the bit higher target for economic growth and at the same time also enhance its efforts to increase revenue generation appreciably. It is worth mentioning here that this will be for the first time in more than two decades that Pakistan will be achieving 5 percent growth rate and that too without any external aid or inflows related to anti-terror war. Achievement of 7 percent economic growth rate, which Pakistan had achieved during the last decade, was mainly due to foreign aid flows more than anything else.

Budget deficit target has been fixed at 3.8 percent of GDP against 4.1 percent of GDP for the financial year 2016-17. The federal budget mainly comprises development and non-development expenditures under various heads and is financed through tax collection, both direct and indirect, by the FBR. Higher tax collection means the gap between the income and expenses of the federal government will be on the lower side. But in case the FBR is unable to achieve targeted revenue collection then, apparently, to bridge the gap, the federal government will perforce resort to levying new taxes.

Here are some straight figures of the federal budget 2017-18 for which efforts are already underway by all concerned to achieve the set targets to the maximum extent possible to keep the fiscal deficit on the lower side. The total outlay of the federal budget is Rs 5103.8 billion which is 4.3 percent higher than the budget estimates of last financial year. Resource availability estimates have been placed at Rs 4713.7 billion which shows some improvement against Rs 4442 billion of last fiscal. Net revenue receipts are estimated at Rs 2926 billion. The provincial share in federal taxes has been put at Rs 2384.2 billion, 11.6 percent higher than last fiscal. Net capital receipts estimate Rs 552.5 billion, showing an increase of 21.8 percent. External receipts have been estimated at Rs 837. 8 billion. Overall expenditure during current fiscal estimated at 5103.8 billion. The shares of current (non-development) and development expenditure in total budgetary outlay is 73.7 percent and 26.3 percent respectively. The expenditure on General Public Services estimates placed at Rs 2553.6 billion which is as much as 67. 8 percent of the current spending and the development expenditure outside the PSDP has been put at Rs 152 .2 billion.

The overall size of the Public Sector Development Programme (PSDP) of the federal government for the new financial year is Rs 2113 billion. The break-up of this highly placed PSDP is federal PSDP Rs 1001 billion and for funding of the Annual Development Programmes (ADPs) of the provinces Rs 112 billion. Further breakdown of the PSDP includes: federal ministries/ divisions Rs 377.9 billion, Autonomous and Semi-Autonomous Corporations, Rs 380.6 billion, for Prime Minister’s Special Development Goals (SDGs) Achievement Programme Rs 30 billion, Special Federal Development Programme Rs 40 billion, Energy for All Rs 12.5 billion, Clean Drinking Water for All Rs 12.5 billion, Earthquake Reconstruction and Rehabilitation Authority (ERRA) Rs 7.5 billion, Special Provision for Competition of China-Pakistan Economic Corridor (CPEC) projects Rs 5 billion, Relief and Rehabilitation of Internally Displaced Persons (IDPs) Rs 45 billion, Security Enhancement Rs 45 billion, Prime Minister’s Initiatives Rs 20 billion and Gas Infrastructure Development Cess Rs 25 billion.

Pakistan’s foreign exchange reserves evolve around 20 billion dollars or so, and efforts are underway to increase the level to at least 25 billion dollars at least. The trade deficit is another major source of concern for the federal government as exports are not going up by much-desired level and contrary to the declining trend in exports, country’s imports keep on going up and up. Foreign exchange reserves go up and down with more imports and lesser exports. Needless to mention here that declining trend in the exports continues to be a major source of concern for the federal government. Though, determined efforts are being made by all concerned to initially stem the declining trend and then boost the exports to at least around 25 billion dollars and hopefully even more than the current level of 20 billion dollars.

The then Prime Minister Nawaz Sharif in January 2017 had announced a hefty package of Rs 180 billion for boosting country’s exports by overcoming hitches and obstacle. Though there are reports of some sectors showing signs of improvement regarding exports the pace is much slower. The exports need to be boosted at much faster speed against present rather dismal pace. Imports, on the other hand, should better be kept restricted to mainly required raw material, machinery, etc. for the manufacturing sectors and import of luxury items and goods should be minimized to the maximum possible. Import of unproductive products and commodities should primarily be scrutinized periodically and dropped as much as possible particularly; goods that are produced and manufactured locally should not be allowed to be imported.

Reduced level of imports and improved and increased exports will go a long way in bringing the trade deficit down and putting the balance in favor of Pakistan as much as possible. The targets, which the federal government has fixed for the financial year 2017-18, are quite realistic, doable and achievable as these are based on the economic growth achievements of the last four years. The financial year is in its third month only and all fairness it is too early to start offering negative comments and questioning achievability of the set targets which are aimed at achieving higher, sustainable and inclusive growth besides generating additional employment opportunities and increasing investment in both human and physical infrastructures. All these afore-mentioned realistic targets are quite appreciable and commendable as everyone wants to see Pakistan making progress and development and ushering in an era of prosperity by leaps and bounds for the people across the country without any discrimination or biases as such.