Incentives in the new
April 22 - 28, 2002
Not only that no-new tax will be imposed in the
budget 2002-2003, fresh relief will be provided to the common man in
the coming budget which will be development and growth oriented the
Finance Minister Shaukat Aziz announced in Islamabad on Monday. He
hinted a slash on withholding tax and about 5 per cent reduction in
Speaking as a Chief Guest at a pre-budget seminar
arranged by the Daily Pakistan Observer, the Finance Minister claimed
that the economy was improving on a sound footing and the government
will certainly like to transfer its fruits to the common man.
Effective measures will be announced in the forthcoming budget to
tackle the issues of unemployment and poverty, he added. Former
Finance Minister Mr. Sartaj Aziz and Mr. Iftikhar Ali Malik, President
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
besides many other representatives of trade and industry spoke on the
occasion and gave various proposals for the coming budget to make it
realistic under the current economic conditions.
Mr. Shaukat Aziz was applauded by intellectuals,
economists and journalists, attending the seminar, when he confidently
announced that the current three year long Poverty Reduction and
Growth Facility (PRGF) extended by the International Monetary Fund (IMF)
may be the last foreign lending to Pakistan as the country has
improved its economy considerably. By the year 2003-2004 when the
present PRGF programme terminates we will be in a position to run the
future programme without any foreign loan. The Finance Minister
claimed that there has been absolutely no increase in the foreign debt
burden of the country since 1999 when the present government took
over. It was $38 billion then and it is same today. On the other hand
there has been a reduction of about Rs.140 billion in the domestic
debts. "It is a new chapter in economic history of the
country," he claimed.
"We succeeded in reducing the current account
deficit and fiscal deficit. Current account deficit is 2 per cent
while fiscal deficit is 5.5 per cent of the GDP", he said adding
that, on an average the current account deficit has been about 5 per
cent and the fiscal deficit about 7 per cent of the GDP during the
last ten years.
He claimed the foreign exchange reserves which are
about 5.5 billion US dollar at present will exceed 6 billion by the
end of next month. He dispelled the impression that Foreign Exchange
Reserves level had increased due to September 11 attacks and said
rather this incident cast bad impact on the economy. "Reserves
increased due to ongoing reforms process and during July last year
reserves had touched the US$ 3 billion mark," he said.
The Minister said the government attached top
priority to economic viability as it ensures any country's sovereignty
and defence. He also referred to various successes of the government
in macroeconomics and said; "only solid foundation, and not the
artificiality, would make the country economically strong". He
said global economic recession and situation in Asia affected our
economy as well, "Even though we have achieved some targets and
results of reforms policies were gradually coming to the fore".
Aziz said new jobs would be created in different
sectors in the next budget to provide job opportunities and decrease
the unemployment by increasing the allocation of education, health,
poverty reduction and social action programmes. Special stress in the
budget for next fiscal year will be laid on the education, health and
poverty reduction programmes, Shaukat Aziz said adding that the budget
allocations in these sectors will be enhanced. The increase in
budgetary allocations in these sectors could provide relief to the
people as they will be provided better educational and health
facilities, he continued.
Minister said that educational standards would be
enhanced in order to produce a good lot of well-educated youth. He
expressed hope that incentives would be given to the private sector
enterprises to win the confidence of this important sector in the
investment in different sectors.
Talking on the globalisation, the Finance Minister
said that in 2005 an open economy would be introduced as a result of
globalisation. It will affect Pakistan. It will be a challenge for the
Pakistan and we have to prepare to meet these challenges. He said that
private sector will be the target of globalisation, if this sector
would not enhance their system, quality, productivity and creativity,
they will face isolation. "This is era of competition, who will
play effectively will remain in the competition", Aziz said.
Former Finance Minister Sartaj Aziz, speaking on
the occasion proposed that the agriculture sector should be exempted
from sales tax, saying already unfavourable conditions like drought
had adversely affected the growers. He pointed out that it was the
agriculture sector that had saved the national economy from any major
disaster so far despite crisis like the post-September 11 scenario. He
explained that the agriculture growth had been up to 6.1 per cent
during 1999-2000, while it had shown a downward trend in the next
year. Its growth was minus 2.6 per cent during 2000-2001.
The former Finance Minister minced no words in
saying that levying of any tax on agriculture inputs would be totally
unjustified as the agriculture was the main pillar of country's
economy. The economy will suffer immensely, if on the dictation of
world donors a tax is imposed on agriculture inputs", he warned.
In the new budget, he proposed maximum emphasis should be laid on
attracting foreign as well as local investment to help reduce
unemployment and poverty.
Similarly, other areas which, he stressed, needed
consistent attention were to help increase purchasing power.
"There must be investment in the growth-oriented sectors",
he noted. He also said there was no more space for levying new taxes
and the government should try to reduce expenditures and take measures
to provide a level playing field to the manufactures. More industrial
units will be closed down if the manufactures went on suffering
because of unfavourable conditions at the international market.
He also called for slashing cost of money, saying
interest rate on lending in the regional countries like India and
Bangladesh was not more than 10-12 per cent, while here in Pakistan it
was around 16-17 per cent. The former Finance Minister further
explained that among other factors why our manufactures fail to find a
competitive atmosphere in the world market was high cost of
production. "For instance, electricity tariff in Pakistan was the
highest among all the South Asian countries," he elaborated.