Finance Minister Ishaq Dar said on Saturday that the country had “successfully” overcome economic vulnerability resulting in a halt to “any further decline”.
The minister was addressing the post-budget press conference in Islamabad. A day earlier, the government unveiled a Rs14.5 trillion bloated budget, with the highest-ever deficit of Rs7.6 trillion in a bid to appease nearly a dozen sectors ahead of the general elections that could antagonise the International Monetary Fund (IMF).
The budget for fiscal year 2023-24 appears to be promoting an informal economy at the expense of the formal sectors and places heavy reliance on bilateral creditors – Saudi Arabia, China and the United Arab Emirates – to fund the expenses.
The measures like an amnesty scheme for legalising $100,000 or Rs29 million in black money and a 0.6% tax on cash withdrawals would encourage the informal economy and increase currency in circulation.
Dar loaded the budget with tax relief and subsidies for nearly a dozen sectors, including 30% increase in salaries of officers and 35% for employees of Grade-1 to Grade-16. He has also announced a 17.5% increase in pensions, besides setting the minimum wage at Rs32,000.
Unveiling the budget in the National Assembly, Dar stressed that “the next fiscal year’s budget will not be an election year budget, rather it is a fiscally responsible budget”. He went on to say that “no independent analyst could say otherwise”.
Speaking to the media today, Dar said the aim of the coalition government is to reverse economic losses and added that the first objective is to “achieve 2017’s economic indicators”.
He stated that efforts are underway to prevent further economic decline while acknowledging the “deep and steep” vulnerability faced by Pakistan.
Maintaining that the goal is to steer Pakistan towards the path of development, the finance minister claimed that with the proper implementation of the PSDP, a growth rate of 3.5% can be achieved with ease.
Dar said since debt servicing constitutes a major portion of this year’s budget, efforts would be made to reverse the prevailing trend.
He also said that with an increase in economic growth, the country’s macroeconomic indicators would improve, inflation will reduce and more jobs will be created.
Reiterating that Pakistan will not default, he said the plan is to make the country self-sufficient.
When asked about subsidies, Dar accepted that the government had provided numerous subsidies> Giving the example of the power sector, he said the government had given a subsidy of Rs1,900 billion and stressed the need to improve the sector.
He also acknowledged that the power sector had been a significant “stumbling block” during talks with the IMF.
Answering a question regarding subsidy for motorists, the minister said the plan was to charge vehicles above 800cc more per litre while giving a discount of Rs50 to vehicles below 800cc and added that the plan was “feasible”.
Dar again said that the government is committed to boosting exports and the country was ranked the 24th largest economy during PML-N’s previous tenure.
Expressing hope for the extension of EU’s GSP Plus status for Pakistan, the minister said the commerce and foreign affairs ministry was handling the matter.