from The International News (Pakistan)..
Friday, June 1, 2012
ISLAMABAD: Federal Minister for Finance, Dr. Abdul Hafeez Shaikh on the eve of historic “election budget” for the fiscal year 2012-13 said that economically this had been the most difficult year for the whole world, Geo News reported.
He said this while pulling the curtain on the Economic Survey 2011-12 during a press conference here in the federal capital.
Talking to the journalists he revealed that amid domestic and international challenges, Pakistan’s GDP rate in the outgoing fiscal year was around 3.7 percent, whereas economic growth was to the tune of 3 percent a year earlier (FY11).
“The growth rate for a country like Pakistan should be at least five to six percent and this is our medium term goal,” he said.
“We had our share of misfortunes, calamities, and other unforeseen crisis in the outgoing year. We noticed foreign investors interest in Pakistan waning owing to a various reasons. As a result investment from the overseas shrank alarmingly”, the federal minister said.
Shaikh said that high oil prices in the international market had affected economies all over the world, including Pakistan’s, and that Taliban and Al-Qaeda-linked violence deterred foreign investors. Pakistan has also suffered from a second consecutive year of major flooding, totting up losses of $3 billion, Shaikh said.
He said that no government in the world possessed any “weapon” that could shoot the skyrocketing inflation down.
“We have also borne the brunt of this inflation, no government likes to watch people losing their affordability. We hope things turn for the better in the upcoming budget.”
Going forward Shaikh dropped clues of ease in the prices of commodities especially fuel.
The minister said the budget deficit was five percent for the period July 2011 to April 2012. External forecasts predict it will nudge closer to seven percent of GDP for the fiscal year amid warnings that the government is running out of ways to fund it.
The IMF bailed out Pakistan with an $11.3 billion loan package in 2008 that stopped last November after Islamabad rejected strict reform demands, largely over tax. Shaikh said tax collection had increased by 25 percent compared to the previous year.
“For the first 10 months we had tax collection of 1,450 billion rupees as compared to 1,050 billion rupees last year and it is an increase of 25 percent which is unprecedented in Pakistan’s history,” Shaikh said.
The country’s tax revenues are among the lowest in the world at just 9.8 percent of GDP in fiscal 2010-2011, says the Asian Development Bank.
Less than two percent of the population pays tax on their income.
The minister said the government had reduced its expenses by 10 percent. Inflation stood at 10.8 percent, compared to 13.8 percent during the previous fiscal year, he said, adding: “We have adopted a tight monetary policy.” Pakistan has also missed out on payments from the United States for its efforts to fight militancy under the Coalition Support Fund (CSF).
This brought around $8.8 billion into Pakistan’s coffers between 2002 and 2011, including $1.5 billion in 2009-10, but Islamabad stopped claiming the money as ties with Washington collapsed in the wake of the raid that killed Osama bin Laden last year.