Country suffers $118b loss in war on terror; Govt employees to get 13 to 13.5pc pay increase; Fiscal deficit to be reduced to 3.8pc of GDP; 60pc definite increase in tax collection
Islamabad—Finance Minister Ishaq Dar on Saturday said that government, in a bid to make Pakistan an Asian Tiger had focused on exports promotion and this is why in the federal budget 2016-17 the government has declared five big export sectors as zero tax rated. Moreover, release of all the sales tax or income tax refunds claims received by April 30, 2016, will be disposed-off by August this year.
Addressing the Post Budget Press Conference here, he said that government was ambitious of increasing the exports volume to the maximum level because exports’ share in developed countries was normally 15% of the GDP. He claimed that economic policies followed by the government would transform Pakistan into an Asian Tiger.
He said that creation of job opportunities, alleviation of poverty, increasing the economic growth and improving the lifestyle of the common man was main focus of the federal government’s policies as well as the federal budget. “Moreover, special heed is being paid towards the curtailing inflation to single digit, maintaining financial management and administrative measures for national economic uplift,” he observed.
He hoped that new measures announced in the budget would give necessary boost to agriculture to extend its contribution in GDP growth. He said that DAP prices had been reduced by three hundred rupees per bag with effect from next month. Similarly, 7% duty on pesticides withdrawn while off-peak rate of electricity for agricultural tube wells lowered from 8.85 rupees a unit to 5.35 rupees a unit.
The Finance Minister pointed out that all out efforts had been made in the budget not to save filers from additional burden of taxes; however, taxes on some of the items would affect people.
He said that tax on mobile phone sets had been increased to compensate tax leakages because of the fact that costlier phones were mis-declared as low category phones. He announced that SROs carrying impacts of Rs 400 billion had been withdrawn.
He said that the biggest ever Rs 1675 billion overall development programme in country’s history had been announced and it would further stimulate economy and create jobs. Allocations for BISP increased will bring more families under its coverage.
He said that Zarb-e-Azb was moving towards its final round and its successful conclusion would help attract foreign direct investment so defence allocations increase despite strict financial constraints. Country suffered huge losses of 118 billion dollars during war on terror.
The Minister that said increase in non-development expenditure contained to seven per cent, but
Federal Government employees would get 10% adhoc relief after merger of two previous adhoc reliefs and as a result, they would get about 13 to 13.5% increase in their salaries.
He said that the Government would be bearing expenditure of Rs 57 billion on account of increase in salaries and pension. Of this, an expenditure of Rs 12 billion would be spent on welfare of low grade employees including upgradation of their scales and increase in allowances meant for them.
He further observed that the Government was according priority to the construction of Western Route of China-Pakistan Economic Corridor as per understanding with political leadership. He said Lahore-Karachi Motorway was missing link in Prime Minister’s vision of Motorways for the country. As no one was ready to undertake this project of 300 billion rupee on BOT basis, this has been included in CPEC.
He said the government aims to reduce the budget deficit from 4.3% of GDP during the current fiscal year (2015-16) to 3.8 percent of GDP in 2016-17.
Ishaq Dar said that through amendment in fiscal Responsibility and Debt Limitation Act 2005, the government is about to undertake two deep-rooted reforms in fiscal management system.
He said first, the government is putting a statutory limit on the credit of the federal government.
Starting 2017-18, in three years, the federal deficit would be brought down to 4% of GDP and thereafter to 3.5 per cent.
Second, the debt to GDP ratio would be brought down to 60% of GDP in the next two years and then over a 15 years period, it would be brought down to 50%. He said the tax revenues would be enhanced from Rs 3104 billion in 2015-16 to Rs 3621 billion in 2016-17.
The minister said that the government has continued focus on energy and around 10,000 MW of additional electricity will be generated by March 2018.
He said, for power, a total of Rs380 billion have been allocated in the federal budget. The minister said that reduction in poverty and unemployment, cash transfers and stipend programme through Benazir Income Support Programme and Development and promotion of ICT sector, were among the priorities of the government.
“Keeping in view difficulties faced by the agriculture sector the government has announced relief for farmers and has taken special steps in the budget,” he said.
The Minister pointed out that agriculture sector posted negative growth this year and with this in view incentives were announced by the Prime Minister, a few months back, which would continue next year.
The Minister said 7% duty on pesticides has been withdrawn while off-peak rate of electricity for agricultural tube wells has been lowered from 8.85 rupees a unit to 5.35 rupees a unit.