Pakistan sets ambitious growth target with $ 54 billion budget

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ISLAMABAD: Pakistan announced Friday, June 11 a budget of 8.4 trillion rupees ($ 54 billion) for the next fiscal year, based on an ambitious growth target of 4.5% and tripling the development spending of the public sector with elections only two years apart.

Finance Minister Shaukat Tarin’s presentation to the National Assembly drew taunts from opposition lawmakers, who tapped their desks and chanted “Imran Khan is a thief”, a reference to the prime minister.

Khan has presented himself as a champion of the poor and pledged to lift the country out of poverty, but Pakistan is heavily in debt and in desperate need of foreign investment.

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Rising inflation has left many people struggling with higher food prices and energy bills.

Tarin said the budget provided some 3 trillion rupees for retirement or current debt service.

“We were on the verge of default because of the bad governance of previous governments, but now we have overcome this crisis,” Tarin said.

The budget allocates 2.135 trillion rupees for public development, including job-creating infrastructure projects, a significant increase from 1.532 billion this year.

“The weaker segment of society has been yearning for prosperity for many years and now sustainable growth is needed,” Tarin told lawmakers, saying the budget would be in deficit by nearly four billion rupees.

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“We expect ripple effects with our fiscal measures,” he said.

Military spending – which has swallowed up a huge chunk of Pakistan’s wealth since the country’s creation with the partition of India in 1947 – will increase by 6% to reach 1.4 trillion rupees.

Tarin said Pakistan’s current account was in surplus for the first time in years thanks to unprecedented remittances and rising exports.

To finance the budget, the government has set a target of collecting tax revenue of nearly Rs 6 trillion, up from Rs 4.5 trillion this year.

The finance minister said some 140 billion rupees had been set aside to vaccinate 220 million people against COVID-19.

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Mohammad Sohail, chief financial officer and CEO of Topline Securities, said the budget was an “exercise in confidence.”

“The biggest challenge will be dealing with the IMF (International Monetary Fund) and rising commodity prices,” he said.

Independent economist Shahid Hasan Siddiqui was more dismissive.

“This whole budget is based on wrong numbers and false hopes,” he said.

“This budget will move the country further away from economic autonomy.”

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