Federal Minister for Finance, Dr.Abdul Hafeez Shaikh Thursday said the devastating floods last year, increasing international oil prices and security situation were the three main factors impacting the country’s economy which slowed down growth rate during fiscal year 2010-11. Unveiling the pre-budget document, Economic Survey 2010-11, here he expressed satisfaction over the positive growth of the economy at 2.4 per cent. He said that notwithstanding unprecedented diverse predicaments including flood disaster and global economic throes, Pakistan’s economy recorded 17 billion dollars in foreign exchange reserves with important initiatives to keep the fiscal deficit at 5.1 per cent and check inflationary hike.
He said the government has collected Rs. 1316 billion in taxes and the Federal Board of Revenue was confident to collect the remaining Rs. 272 billion.
The major focus of the government’s economic policies was to check inflation in the current challenging economic conditions, caused by flash flood, galloping increase in oil prices in the international market and certain other factors, he said.
Dr Shaikh said the GDP for the year 2010-11 was fixed to grow at 4.5 per cent, however the devastating floods hit the economy badly and the growth rate was reduced to 2.4 per cent.
“We faced challenges but this is the time when all the political parties and civil society are determined to lead the country out of these crises,” he said adding “with joint efforts we would lead the country out of these crises.”
Despite all odds, the Minister said the several sectors of economy including exports and remittances have shown considerable growth during the outgoing fiscal year.
He said that the overall agriculture sector registered growth rate of 1.2 percent.
The Minister was flanked by members of his economic team including Finance Secretary Dr Waqar Masood, Secretary Planning Division Sohail Ahmed, Chairman FBR Salman Siddique and Secretary Information Taimur Azmat and other officials of the Ministry of Finance.
The Finance Minister said that due to devastating floods the growth in major crops, witnessed negative growth of 4 per cent.
The manufacturing sector also grew by 3 per cent despite increase in oil and energy prices while the services sector witnessed positive growth of 4.1 per cent.
He said that the investment to GDP (Gross Domestic Product) ratio was recorded at 13.4 per cent during the year against 15.4 per cent last year adding that security and high input rates were the main hurdles in investment.
During May 2011, the Board collected Rs. 160 billion against Rs. 110 billion collected during the same month of last year, showing an increase of Rs. 50 billion.
Privileged classes, he said were being brought into tax net besides ensuring that tax money is spent judiciously for the welfare of the people and development purposes.
He added that the taxpayers who are paying thir due taxes would not be overburdened and efforts would be made to bring those people under the tax net who are earning high incomes and not paying their taxes.
Responding to a question, he pointed out primarily agriculture tax was a provincial subject as enshrined in the Constitution.
He added that Prime Minister Yusuf Raza Gilani discussed the matter of agriculture tax in a recent meeting of Council of Common Interest (CCI).
It was decided on the occasion to set up a committee for creating a consensus among the provinces on this issue.
The agriculture tax, which is already in force, should be effectively collected by the provinces, the minister said.
Shaikh said that important decisions were being taken to get an access in the foreign markets which would in return help create jobs and employment in the private sector.
He said that the exports have witnessed historic growth of 28 per cent and have increased from $18.8 billion last year to $20.2 billion during July-April (2010-11).
He said that the export figures are expected to cross the $24 billion mark this year.
The remittances also witnessed a considerable growth during July-April (2010-11) by increasing from $7.3 billion during the same period of last year to $9.1 billion.
He said that government’s bank borrowing has declined by Rs. 16 billion during the current year as compared to last year.
The Minister said the government not only resorted to less borrowing from the State Bank of Pakistan but also has frozen
the government expenditure and pursuing the austerity measures in true spirit.
Minister for Finance Dr. Abdul Hafeez Shaikh said that the expenditures on President and Prime Minister houses were trimmed, and economy drive would continue in future to retrench government expenditures.
The Current Account Deficit registered an improvement despite petroleum price escalation in the international market, he said.
The government released an amount of Rs 500 billion as subsidy to ensure that electricity prices are maintained at a reasonable level.
The flood adversely affected major crops by four per cent, destroyed the rice production by thirty per cent and decreased the overall pace of growth. The workers remittances increased by 24 per cent during the outgoing fiscal year, he added.
During current financial year, government set aside an amount of Rs. 150 billion for the development programmes in the provinces despite financial constraints and economic woes.
The Finance Minister said the government has taken several measures to manage a very difficult economic situation and highlighted the importance of becoming self-sufficient.
He said the government has taken certain steps to broaden the tax base and bring into the tax net the high income earners.
Several sectors including fertilizer, tractors, textile, carpet, leather and sports would be taxed to broaden the tax net, he added.
He said that the fiscal deficit for the year 2010-11 was expected to remain 4 per cent of the GDP, however, due to unfavorable circumstances it grew to 5.1 per cent.
The Finance Minister said that government has taken initiatives to further increase the involvement of private sector in
business activities as it was not the job of the government to do business.
He said the government was also making efforts to get access for the Pakistani products in the international market, particularly in the European Union.
He said that under the Coalition Support Fund (CSF) Pakistan has this year received $ 745 million, which would further increase by the end of current financial year. APP
Dr Shaikh said the GDP for the year 2010-11 was fixed to grow at 4.5 per cent, however the devastating floods hit the economy badly and the growth rate was reduced to 2.4 per cent.
“We faced challenges but this is the time when all the political parties and civil society are determined to lead the country out of these crises,” he said adding “with joint efforts we would lead the country out of these crises.”
Despite all odds, the Minister said the several sectors of economy including exports and remittances have shown considerable growth during the outgoing fiscal year.
He said that the overall agriculture sector registered growth rate of 1.2 percent.
The Minister was flanked by members of his economic team including Finance Secretary Dr Waqar Masood, Secretary Planning Division Sohail Ahmed, Chairman FBR Salman Siddique and Secretary Information Taimur Azmat and other officials of the Ministry of Finance.
The Finance Minister said that due to devastating floods the growth in major crops, witnessed negative growth of 4 per cent.
The manufacturing sector also grew by 3 per cent despite increase in oil and energy prices while the services sector witnessed positive growth of 4.1 per cent.
He said that the investment to GDP (Gross Domestic Product) ratio was recorded at 13.4 per cent during the year against 15.4 per cent last year adding that security and high input rates were the main hurdles in investment.
During May 2011, the Board collected Rs. 160 billion against Rs. 110 billion collected during the same month of last year, showing an increase of Rs. 50 billion.
Privileged classes, he said were being brought into tax net besides ensuring that tax money is spent judiciously for the welfare of the people and development purposes.
He added that the taxpayers who are paying thir due taxes would not be overburdened and efforts would be made to bring those people under the tax net who are earning high incomes and not paying their taxes.
Responding to a question, he pointed out primarily agriculture tax was a provincial subject as enshrined in the Constitution.
He added that Prime Minister Yusuf Raza Gilani discussed the matter of agriculture tax in a recent meeting of Council of Common Interest (CCI).
It was decided on the occasion to set up a committee for creating a consensus among the provinces on this issue.
The agriculture tax, which is already in force, should be effectively collected by the provinces, the minister said.
Shaikh said that important decisions were being taken to get an access in the foreign markets which would in return help create jobs and employment in the private sector.
He said that the exports have witnessed historic growth of 28 per cent and have increased from $18.8 billion last year to $20.2 billion during July-April (2010-11).
He said that the export figures are expected to cross the $24 billion mark this year.
The remittances also witnessed a considerable growth during July-April (2010-11) by increasing from $7.3 billion during the same period of last year to $9.1 billion.
He said that government’s bank borrowing has declined by Rs. 16 billion during the current year as compared to last year.
The Minister said the government not only resorted to less borrowing from the State Bank of Pakistan but also has frozen
the government expenditure and pursuing the austerity measures in true spirit.
Minister for Finance Dr. Abdul Hafeez Shaikh said that the expenditures on President and Prime Minister houses were trimmed, and economy drive would continue in future to retrench government expenditures.
The Current Account Deficit registered an improvement despite petroleum price escalation in the international market, he said.
The government released an amount of Rs 500 billion as subsidy to ensure that electricity prices are maintained at a reasonable level.
The flood adversely affected major crops by four per cent, destroyed the rice production by thirty per cent and decreased the overall pace of growth. The workers remittances increased by 24 per cent during the outgoing fiscal year, he added.
During current financial year, government set aside an amount of Rs. 150 billion for the development programmes in the provinces despite financial constraints and economic woes.
The Finance Minister said the government has taken several measures to manage a very difficult economic situation and highlighted the importance of becoming self-sufficient.
He said the government has taken certain steps to broaden the tax base and bring into the tax net the high income earners.
Several sectors including fertilizer, tractors, textile, carpet, leather and sports would be taxed to broaden the tax net, he added.
He said that the fiscal deficit for the year 2010-11 was expected to remain 4 per cent of the GDP, however, due to unfavorable circumstances it grew to 5.1 per cent.
The Finance Minister said that government has taken initiatives to further increase the involvement of private sector in
business activities as it was not the job of the government to do business.
He said the government was also making efforts to get access for the Pakistani products in the international market, particularly in the European Union.
He said that under the Coalition Support Fund (CSF) Pakistan has this year received $ 745 million, which would further increase by the end of current financial year. APP
