Budget outlay to be Rs two trillion: Salman
LAHORE (June 03 2007): PM's Advisor on finance Dr Salman Shah, delivering his key-note address at 'Budget 2007-08 - a Milestone in Continuation of Economic Reforms' in a seminar held under the auspices of the Information and Broadcasting Ministry, said here on Saturday that budget outlay would be between Rs 1.92 trillion and Rs 2.00 trillion.
He averred that Rs 724 billion of the budget would be earmarked for development projects of which Rs 520 billion would be spent on PSDP while Rs 204 billion would come from resources other than PSDP, he pointed.
He said the capacity building improvement already in the offing in the country, the education portfolio in the next budget would be to the tune of 4 percent of GDP. Dr Salman Shah said with the increase in minimum wages and salaries as well as in pensions Rs 200 billion subsidies and grants would be given on petrol, electricity and food items to weak economic fiber of the society.
Referring to the increase in health and education portfolios in next budget, he said 20 percent increase was expected there. The present government would also cater to the needs for the improvement in construction industry portfolio in budget 2007-08, he added.
Speaking of the contours of the next financial budget, he said defence budget would be less than 3 percent of the GDP in it. The trade deficit would be restricted to the level of 4 percent in the next budget, he added. Averring on the state of economy in the country, Dr Salman Shah said there had been a balanced growth with GDP remaining at 7 percent and investment to the GDP ratio crossing over 23.5 percent in the current year, he dilated.
He said Pakistan had emerged as Asia's fastest growing economy with 7 percent GDP ratio achieved in the previous five years. The country was head in the radar of investment portfolio in the world and would not lag behind in the race of development, he added.
The advisor said the country achieving the mark of $6 billion in foreign investment in the current fiscal year, achieved a milestone that had never been arrived before in the history of the country.
He said that investments arriving in the country in portfolios such as financial sector, telecom, manufacturing and agriculture were being made on long-term rather than on short-term basis. He said this foreign investment had much more potential here.
Citing example of China, he said there had $70 billion foreign investment in that country during the year and Pakistan also had the potential to multifold its performance here.
Stating that population of Pakistan is better than other countries of the world and under the estimates of Goldman Sache, he said country's labour force would scale to fourth largest place where its economy stood at number 20 in the ranking.
The advisor said that with the ongoing development process remaining unhindered, Pakistan economy had the potential of climbing number six in the world.
Referring to emergence of middle class in the country, he said there had been tremendous growth in food, automobile, AC, clothe portfolios in the country. He dilated that there had been 30-35 percent growth achieved in car portfolio while 200 increase had been witnessed in ACs production.
Speaking about increase in demand, he averred that it had substantially occurred in milk, butter, bread and other related sectors. The advisor said with the demographic picture sound Pakistan was increasingly becoming a part of world markets.
Emphasising the capacity building, the Dr Salman Shah said with 10 new engineering universities coming up in the country, and multi billion investment would occur there in next 10 years. Speaking about development in the energy sector, he said the country had the potential of producing 50,000 megawatt. He warned that if water reservoirs in the country were not made, posterity would not forgive them. He said new projects were coming up in the sector.
Referring to GDP public debt ratio of the country, he said it stood at 51 percent of GDP. He stressed that this level should drop to 20 percent in next 10 years. Speaking about recent success of bonds issued by Pakistan in international market, he averred that with its maturity in 2017, the bond's mark-up rate was 6.875.
The advisor said that for sustained development there was a dire need for reducing hassle factor, adding it was important that special economic zones were made and spread over the country. He said public sector would be involved in these ventures. He said that Pak-China Special Economic Zone was being established in Lahore.
Speaking about rising trend in food prices in the country, the advisor said that measure were being taken to deal with this factor in forthcoming budget. He said they were doing their best to remove the middleman between farmer and consumer so that price of commodities were lower when commodities reached masses.
He said food items inflation was 15 percent at world level where it was less in Pakistan as compared to this level, adding the increase in local production of food items would reduce related inflation here. Speaking about inflation in the country, he said overall inflation had crossed the rate of 7 percent against target version of 6.5 percent, however this figure would be curtailed in future, he pointed. About target given to CBR in year 2006-07, he said that target was of more than Rs 1 trillion.
Dr Salman Shah showed dismay over higher rate of interest in borrowing during 1996 onwards until this government took reign of power. He said the present government was under stress in paying off these huge mark up sums that stood to the tune of 18 percent otherwise they would have spent much more on masses, if that situation had not existed.
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