ISLAMABAD: The Federal Cabinet which met under the chairmanship of Prime Minister Muhammad Nawaz Sharif at the Prime Minister’s Office Tuesday approved the budget strategy for 2015-16.
The Prime Minister, on the occasion, said that the next budget should focus on the welfare of the common people so that the process of transferring the fruits of growing economic stability of the country is further strengthened. He appreciated the fact that key economic indicators, which were rock bottom two years ago have improved remarkably. He added that out of box solutions must be explored in designing tax proposals for broadening the base and for increasing our revenues. He said that a system should be devised which results in reduction of corruption and encourage voluntary compliance from taxpayers.
The Prime Minister congratulated the Finance Minister and his team on achieving high growth and economic stability in the country. He lauded the efforts of the expatriate Pakistanis for sending their remittances to Pakistan. He directed that steps should be taken to facilitate overseas Pakistanis to send remittances through banking channels. The Prime Minister expressed his satisfaction that the reduction in policy rate from 8% to 7 % will help encourage investment in the Country. The Prime Minister also directed the Ministry of Commerce to gear up efforts to increase exports.
The Cabinet meeting took note that while benefits of mega projects in the pipeline will start unfolding in next 5-10 years; immediate measures are needed to encourage investment in the private sector. The Prime Minister directed that the overall prosperity of the masses should be the top priority in the next budget and said that the current trend of GDP growth should continue to increase the employment opportunities for the youth. He said that we must address the issues of agriculture and manufacturing sectors to boost growth and work day in and day out to further strengthen country’s economy. The cabinet after detailed discussion gave approval to budget strategy paper 2015-16.
Earlier, the Finance Minister Senator Ishaq Dar and Secretary Finance Division Dr. Waqar Masood Khan gave a detailed presentation to the Cabinet members on the strategy being followed in formulation of proposals for the next budget. The Finance Minister, while briefing the Cabinet said that the government is concentrating on major policy initiatives that are aimed at consolidating stability and spurring growth.
The Finance Minister briefed that when we took the reigns of the government, the economy was weak and fragile and the growth rate averaged less than 3 % and inflation had averaged around 12 %. The circular debt of Rs 503 billion was crippling the power sector and economy. The fiscal deficit was hovering around 8.8% and there were predictions of default. However due to economic policies of the government, the economy is now performing well.
He said that in the medium term our plan is to gradually grow GDP to around 7 % and contain inflation to single digit i.e. less than 6 %. He added that we intend to bring down fiscal deficit to 4 % and increase foreign exchange reserves to US $ 20 billion. We have also set the target of increasing tax-GDP Ratio to 13% and increase exports to US $ 32 billion, he said
He briefed the Cabinet that the FBR tax collection had increased from Rs. 1946 billion in 2012-13 to Rs. 2266 billion in 2013-14 and during the last 10 months the tax collection has reached to Rs. 1968 billion with an increase of 12.8 % from the corresponding period of last financial year. There has been an increase of 200,000 taxpayers in the last two years, he informed.
The Finance Minister said that in the first year we achieved GDP growth rate of 4.02 % and during the current year we will achieve 4.24 % which is highest in the last seven years. He said that we have also brought down budget deficit from 8.2 % in 2012-13 to 5.0 % during the current year. Overseas remittances have also reached US $ 14.8 billion during the period of July- April of the current fiscal year showing a growth of 16.06%. He informed that the foreign exchange reserves have also reached to US $ 17.5 billion on May 25th, 2015.
He informed the Cabinet that this budget will InshaAllah bring encouraging incentives for the betterment of the overall economy and for generation of employment opportunities. Cabinet was informed that the budget will acknowledge the development oriented approach of the PML-N government. He added that, “we have tried to incorporate the suggestions from different sections of the economy in this budget and this is the most appropriate time to boost investment in areas which have the potential to grow at a high rate when the interest rates are historically low and we have more space available for encouraging the development works”.