Inflation – Ambitious hopes to reach 5.1% increment, cabinet approves strategy

The federal government may declare a Rs3. 744-trillion budget outlay for the next financial year with an ambitious economic growth rate of 5.1% that is anticipated to be accomplished through the completion of unfinished economic reform agenda in the second year of the Nawaz administration.

Advertisement

Federal Minister for Finance Ishaq Dar will announce the next budget in the National Assembly on June 3, 2014 in accordance with the communication sent out by the Finance Ministry to other relevant economic ministries.

Acquisition of the 4.8% target will hinge on the power of the four states to save over Rs110 billion out of their shares in federal receipts, which they will get from the federal government, officials alleged.

The GDP growth target for the next fiscal year has been envisaged at 5.2 percent of the GDP for the next financial year 2014-15 against the provisional assessment of 4.14 percent for the outgoing financial year 2013-14. These are indicative macroeconomic targets and a final approval in this regard would be granted by the National Economic Council (NEC).

Officials said gross federal receipts are likely to be around Rs3.6 trillion. Out of that, the provinces are expected to get about Rs1.7 trillion, including straight transfers, as they share in federal taxes, leaving the federal government with a net income of Rs1.9 trillion.

 The government will announce development schemes under the Pak-China Economic Corridor project, according to officials. Out of Rs525 billion proposed development budget, the government is considering to set aside Rs100 billion for new initiatives, including Lahore-Karachi motorway, building jetties and roads to link China with Gwadar.

The budget shortfall for the next fiscal year has been envisaged at Rs1, 255 billion or 4.8 percent of the GDP in 2014-15 where efforts would be built to reach the highly ambitious tax collection target of Rs2, 800 billion in the coming financial year.

The regime could not accomplish the goal of increasing FBR’s tax-to-GDP ratio to 9.5% this year, it has decided to introduce reforms during the following financial year. It will declare the aim of bringing in 100,000 people in the tax net – a goal that it could not attain this year.

For serving the domestic and foreign debt, the regime is considering allocating Rs1.29 trillion next year. Temporarily, the defense budget is anticipated to be around Rs690 billion, according to officials. An amount of Rs294 billion is anticipated to be allocated for carrying the civilian government.

Advertisement