ISLAMABAD: Even as it grapples with the coronavirus pandemic, Pakistan plans on boosting expenditure by 40% for large infrastructure projects to provide more jobs and raise productivity.
This was revealed by Minister for Finance Shaukat Tarin to Bloomberg in an interview .
Tarin, who was recently given the helm of Pakistan’s financial matters, is due to present the budget next month.
He said in the new fiscal year, the government will set aside as much as Rs900 billion ($6 billion) for development expenditure.
According to Bloomberg, Tarin said that the economy needs to expand by 5%.
“That’s the bare minimum we need for a country this size,” he said. “There are almost 110 million youth.”
“We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”
Bloomberg’s report said that Tarin’s plan, therefore features a new approach. It notes that his predecessor’s move was to lower spending so the growing deficit can be arrested. Tarin has estimated the budget deficit to be ” a little above 7% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year”.
Therefore, the deficit in FY2021-22 will reduce by 1 or 1.5 percentage points.
Under the $6bn loan programme with the IMF, balancing the budget will be key for the government and Tarin has asked the Fund to ease tough conditions, the report notes.
IMF’s strict conditions also have a political cost: Shaukat Tarin
IMF has projected 4% GDP but the government has aimed for a percentage point higher in the coming fiscal year and Tarin plans on raising it to 6% in the year after.
Tarin also told Bloomberg that he is targeting a larger tax revenue collection in FY22 — Rs6 trillion versus this year’s target of Rs4.75 tr. “Unless we get more revenues, forget about any incentives to boost the economy.” Bloomberg
