Budget paper envisages 4.5pc GDP target

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ISLAMABAD - The federal cabinet on Thursday approved the Budget Strategy Paper (BSP) 2013-16 envisaging GDP growth target at 4.5 percent and budget deficit at 5.8 per cent of the GDP for the next financial year 2013-14. The federal cabinet that met under the chair of Prime Minister Raja Pervaiz Ashraf has approved the Budget Strategy Paper (BSP) 2013-16. The finance ministry has finalised main contours of the budget for the next fiscal year 2013-14 in the Budget Strategy Paper. Total budget outlay would be around Rs 3.2 trillion for the next financial year 2013-14. The size of nominal GDP is projected at Rs 26.742 billion for the upcoming fiscal year.

According to draft of the BSP 2013-16, the budget for the next fiscal year has projected a growth in Gross Domestic Product (GDP) at 4.5 percent that was estimated at 4.3 percent for the ongoing year. The budget deficit has been estimated at Rs 1,620 billion (5.8 percent of the GDP) with provincial surplus of Rs 70 billion for the next fiscal year 2013-14. The budget deficit was projected at 4.7 percent for the ongoing year.

The government will earmark Rs 627 billion for defence showing an increase of 10 percent raise against revised budget of Rs 570 billion of the present fiscal year. Allocation for the Public Sector Development Plan (PSDP) will be increased to Rs 450 billion in the fiscal year 2013-14 against the Rs 360 billion of the year 2012-13.

The documents further revealed that government would allocate Rs 1.149 trillion for the interest payment in the upcoming financial year 2013-14 against Rs 1.028 trillion earmarked for the current fiscal year 2012-13. The government would allocate Rs 155 billion for the pension for next fiscal year 2013-14 as against Rs 141 billion of the year 2012-13.

According to the draft, government would keep Rs 278 billion for the federal government service delivery as compared to Rs 262 billion of the ongoing financial year. Meanwhile, the government has planned to release Rs 364 billion for subsidies in 2013-14 against Rs 237 billion earmarked for 2012-13 which witnessed an increase of 5.5 percent in revised estimate giving a total of Rs 345 billion.

Federal government will slash grant to provinces to Rs 54 billion in next year from Rs 57 billion earmarked in budget of the ongoing year.† Grant to other than provinces will be increased to Rs 393 billion in 2013-14 from Rs 383 billion in 2012-13.

The estimated total revenue (tax and non-tax) in 2013-14 will be Rs 2.833 trillion and FBRís target would be Rs 2.675 trillion. The projected amount for non-tax revenue has been estimated at Rs 689 billion. Gross revenue will be Rs 3.522 trillion. Federal government will transfer Rs 1.628 trillion to provinces under the NFC Award after which net revenue available to the federal government is estimated to be Rs 1.894 trillion.

The government has planned to increase tax to GDP ratio to 10 percent of the GDP in next financial year 2013-14 from revised estimates 9.4 percent of the GDP of the current fiscal year. Investment to the GDP would enhance to 13.6 percent of the GDP from 12.6 percent and consumption to the GDP would bring down to 93.4 percent in next fiscal year from 94.5 percent of the current year. Meanwhile, the public debt would be reduced to $57.5 billion in next financial year 2013-14 from $60.4 billion of the current year.

Meanwhile, according to the BPS draft, exports would increase to $26.1 billion in next year 2013-14 from $25.3 billion of the current year 2012-13. Imports are projected at $42.6 billion and remittances at $15.5 billion in 2013-14. The State Bank of Pakistanís forex reserves in 2013-14 are estimated at $5.2 billion against $ 8.1 billion at the time of budget announcement. To stabilise foreign reserves, three important short-term measures are required: i) auction of 3G spectrum licences, which is likely to generate around $850 million, ii) negotiations with Etisalat for the realisation of privatisation proceeds of $800 million, and iii) floatation of Eurobond of around $500 million.

The BSP draft further stated that it is important to lay a path of fiscal consolidation at least 0.7 percent of GDP each year. The aim is to achieve fiscal deficit target of 4.5 percent by the year 2015-16.

The documents further stated main sectoral priorities for the budgetary allocations over the medium term included security, defence, energy (dams), water (dams, canals, drainage, barrages), highways, Benazir Income Support Programme, Special areas including Azad Jammu and Kashmir, Gilgit Baltistan and FATA, higher education, science and technology. Provinces would be encouraged to enhance spending on health, education, social welfare and provision of clean drinking water.

Sources informed that finance ministry would firm up budgetary estimates for the next financial year 2013-14 after getting approval of Budget Strategy Paper from the federal cabinet. Sources added that new government would announce the new budget not the caretaker set-up.

Courtesy: The Nation

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