he planners of the country are likely to pledge
two-third of next years' development budget exclusively for human and
Ashfaque Hasan Khan, Economic Advisor to the
Government of Pakistan said "roughly two-third of the development
budget would go to physical and human infrastructure," Khan said
while confirming over Rs300 billion public sector development plan for
the fiscal 2005-06.
"The biggest challenge for us in the coming
budget is to sustain growth momentum. We would focus on improving
physical infrastructure, human development, education and health and
the budgetary allocations for these sectors would reflect marked
improvement in these sectors.
Growing criticism over government's failure in
trickling down the growth fruit to poor segments of society is also
likely lead them to take effective steps in that way. "We also
want that the present growth momentum should be translated into job
creation so that lower segment of society could benefit of the
growth," he said.
"On the education side our focus would be on
vocational training to fill the skill gap in industrial sector. We aim
to develop 300,000 skilled workers in the next year." For
inflation, he said that the government has already taken steps to
bring down inflation. "It is food-related inflation and we are
focusing on augmenting supply. In this regard we have already allowed
duty free import of foodstuff from regional countries."
"Wheat makes an important part of food-related
inflation and due to our measures its price has witnessed four percent
decline in May. "We are hoping it will come down and I am sure it
will be in single digit in the next fiscal year."
The budget would also reflect a visible shift
towards development in livestock sector, which has been neglected in
the past and contributes very little in the economy. 30 to 35 million
people directly or indirectly are dependents of livestock and tapping
this sector could bring about radical improvement.
Pakistan is also expected to increase its defence
budget while faced with challenges of rising inflation and interest
rates but pledge to fight grinding poverty by spending higher on the
social uplift for the fiscal year to June 2006.
Prime Minister Shaukat Aziz's government is
scheduled to present federal budget in the national assembly on June 6
for the year 2005-06 with a reported outlay of over Rs1000 billion
($16.7 billion) as compared to Rs903 billion in the current fiscal.
"A considerable increase in defence budget is
imminent because for past few years it has not been increased in real
terms," an official said requesting anonymity. However, he did
not give the size of the increase.
For the current fiscal, the government had
allocated Rs193 billion ($3.22 billion) slightly up by Rs13 billion
compared to previous fiscal year.
Pakistan's Minister for State on Finance refrained
to confirm upfront. "No comment," Omar Ayub Khan, the State
Minister, said in a telephonic conversation from Islamabad but
spontaneously said, "we will not compromise our defence
capabilities and national interests." Pakistani defence
expenditures come under severe criticism as it takes away huge chunk
of nation resources leaving insufficient means for social sector while
one-third of 150 million population still living below poverty line.
Upbeat on the back of robust economic growth which
may touch to 8.3 percent against the projected target of 6.4 percent
for the current fiscal, Shaukat Aziz's cabinet, however, would gear up
its efforts to tackle inherent challenges of weak social and physical
"With the grace of Allah, we would grow at the
rate of 8.3 percent this year and ready to meet challenges of
infrastructure lag and the forthcoming budget would be a pro-growth
one," said Khan, who will read out the budget in the assembly.
National Economic Council (NEC) of Pakistan has approved Rs300 billion
development budget, which is 48.5 percent more for the year to June
2006, compared to Rs202 billion for the current year.
"We will concentrate on (supply) of clean
drinking water, technical education, rural credit and creating
jobs," he said. The budgetary measure may help create 300,000
jobs next year, he said.
Critics doubt on the government capabilities to
effectively utilise the development budget and tackle the
macroeconomic challenges lying ahead.
"The real problem is utilisation of the
development funds and in Pakistan this rate is abysmally low and this
higher development budget becomes meaningless," said associate
professor of finance and economics at Institute of Business
Administration (IBA) Masood Qazi.
"Situation is quite bleak as a recent report
of (central) State Bank has indicated and poverty is on rise as
international institutions are pointing at and the inflation is a
direct hit to country's poor," said Qazi, who is also a
researcher as well.
State Bank of Pakistan, which brought out its
periodical report on country's economy last week said Pakistan was
gripped by rising inflation which could pose a serious challenge to
its economy. The inflation rate surpassed 11 percent after the
consumer price index hovered between none and 10 percent through most
of 2004-5. "The most important thing to be seen is as to how the
government trade-off between growth and inflation," commented
Sustainable Development and Policy Institute (SDPI) consultant on
economy, Moeed Yusaf.
Economic planners, however, complacent with
measures they have lately taken to curb rising inflation.
"40 percent inflation has come from food
components and way have took steps to beef up supplies lines and they
(importers) are opening L/Cs to import food items daily," Khan
Pakistan has lately allowed import of potatoes,
onion, livestock imports from neighboring India to conform supply with
demand despite its own agriculture sector has substantially exceeded
the annual target of four percent.
"The next few months will be critical to
determine whether inflationary pressures are receding as a result of
the measures taken to augment supplies of critical food items,"
the bank said.