The Finance Minister explains the facets of next budget and describes the need for enabling environment for achieving the desired growth targets


May 26 - June 01, 2003 




Talking at a pre-budget seminar organized by Management Association of Pakistan (MAP), Shaukat Aziz, Minister for Finance and Economic Affairs said that preparation of budget was no longer a confidentiality. Now the government fixes achievable targets with the active participation of all the stakeholders. The aim is to create enabling environment rather than seeking SROs driven investment. The GoP no longer wishes to be in the business of managing business and wants the private sector to play its due role. The GoP wishes to be only the facilitator. With the improvement in most of the economic indicators the economic sovereignty of Pakistan has improved considerably but there is no room for complacency. A lot more has to be done to achieve over 6% GDP growth rate.

The GoP plans to achieve a number of targets over the next five years. These include, achieving over 6% GDP growth rate, raising per capital income above US$ 600, keeping inflation below 5% per annum, improving investment to GDP ratio and developmental expenditure as percentage of GDP and bringing down public debt. Most of these targets are achievable. However, there are certain pre-requests necessary for achieving the targets. These are regional and domestic political stability, law and order situation, consistent and transparent policies, consistency of ongoing policies and above realization of fiscal responsibility.

To achieve the targets the GoP is focusing four priority areas. These are agriculture, large scale manufacturing, construction and small and medium enterprises. Since the largest percentage of population lives in rural areas, the problems facing the agriculture have to be resolved. The priorities are to ensure adequate supply of irrigation water, availability of inputs at affordable prices, credit for procurement of seeds, fertilizers and agricultural implements. At the same support prices of various crops are revised regularly to take care of inflation factor. With the improved purchasing power of farmers demand for a number of items is expected to improve.

The robust performance of manufacturing sector, above 10% during the current fiscal year so far indicates better capacity utilization. At the same time, higher credit off take by the private sector hints towards expansion of existing capacities, mainly for value addition. With the expansion of textile manufacturing base in the country, exports are expected to improve both in terms of quantities and in terms of value. To facilitate the exporters the GoP plans to further rationalize tariff regime, particularly duty drawback system.

Construction activities in the country have picked up lately due to large inflow of funds. To further facilitate owning of a house, the government has come up with improved housing finance policy. Most of the banks are now actively participating in housing finance business. The boom in construction industry is not only creating job opportunities but also providing new impetus to a number of other industries. According to experts a vibrant construction industry supports over 42 different industries. With the improved fiscal condition the GoP plans to allocate higher amounts for infrastructure projects, healthcare and education. Along with this the GoP also aims implementing structural reforms at provincial and district government levels. All these efforts are improving the quality of life of masses.



Earlier in his presentation Ebrahim Sidat, bought to the notice of the Minister, the various demands of trade and industry. He was of the view that sentiments have improved from gloomy to optimistic. To capital the change in mind-set, the various irritants, though may be small, must be removed with further delay. He particularly highlighted the need for changing the tax policy. It is true that each citizen must contribute his or her share in tax, the policy of double taxation and squeezing the existing taxpayers should be stopped. There should be incentive for investment in the form of investment allowance and withdrawal of tax on dividend income.

In his welcome address, Masoud Naqvi, President of MAP thanked the Minister. This seminar was arranged at a very short notice. However, the large attendance of senior executive and professional managers confirmed that people in Pakistan want to make contribution in preparation of budget. The process of mutual consultation with all the stakeholders must continue at every level.