The Finance Minister said that the economy had shown resilience despite severe challenges, including floods, security situation, energy shortages, rising oil and commodity prices and high interest rates.
He added that the government had tried its level best to cut expenditures, however, there were certain expenses, including defence and debt servicing which could not be curtailed.
He said that shifting the 57.5 per cent share of resources to provinces under the National Finance Commission Award had put burden on the federal budget as the Centre retained only 42.2 per cent.
He said that the government had not only freezed its expenditures but also reduced them to a considerable level to check fiscal deficit. Even new recruitments had been banned.
Dr Shaikh said that the government was taking solid steps to phase out the system of general subsidies. It was working out a vibrant system, featuring targeted subsidy as the general subsidies put unnecessary burden on the national kitty benefitting the well-off people only.
As matter a fact, he added, the subsidy was meant only for the poor to give them relief from inflationary shocks.
As part of such efforts, he added, the government was making the Benazir Income Support Programme (BISP) and Pakistan Baitul Mal more effective by increasing their allocations in order to reach out to maximum number of the poor.
He said during the outgoing financial year the BISP was given Rs 35 billion, benefiting around four million families and now the cabinet had decided to increase its allocations to Rs 50 billion.
Similarly, he added, the Pakistan Baitul Mall programmes would be given more funds to support the needy segments of the society.
Referring to people’s welfare policies, he said the government had always tried to support the poor masses and it had to bear Rs 50 billion as subsidy on petroleum products’ prices.
Answering a question, the minister said the economic indicators had started to improve now, necessitating to gradually withdraw subsidies.
He said that the budget was pro-poor as it envisaged several relief measures, including abolishment of special excise duty from 100 items and the regulatory duty from 392 items.Similarly, he added, the federal excise duty would be phased out in three years.
He added that the government had tried its level best to cut expenditures, however, there were certain expenses, including defence and debt servicing which could not be curtailed.
He said that shifting the 57.5 per cent share of resources to provinces under the National Finance Commission Award had put burden on the federal budget as the Centre retained only 42.2 per cent.
He said that the government had not only freezed its expenditures but also reduced them to a considerable level to check fiscal deficit. Even new recruitments had been banned.
Dr Shaikh said that the government was taking solid steps to phase out the system of general subsidies. It was working out a vibrant system, featuring targeted subsidy as the general subsidies put unnecessary burden on the national kitty benefitting the well-off people only.
As matter a fact, he added, the subsidy was meant only for the poor to give them relief from inflationary shocks.
As part of such efforts, he added, the government was making the Benazir Income Support Programme (BISP) and Pakistan Baitul Mal more effective by increasing their allocations in order to reach out to maximum number of the poor.
He said during the outgoing financial year the BISP was given Rs 35 billion, benefiting around four million families and now the cabinet had decided to increase its allocations to Rs 50 billion.
Similarly, he added, the Pakistan Baitul Mall programmes would be given more funds to support the needy segments of the society.
Referring to people’s welfare policies, he said the government had always tried to support the poor masses and it had to bear Rs 50 billion as subsidy on petroleum products’ prices.
Answering a question, the minister said the economic indicators had started to improve now, necessitating to gradually withdraw subsidies.
He said that the budget was pro-poor as it envisaged several relief measures, including abolishment of special excise duty from 100 items and the regulatory duty from 392 items.Similarly, he added, the federal excise duty would be phased out in three years.
Dr Hafeez Shaikh said the refund system in Federal Board of Revenue (FBR) had been streamlined during the current year. Some 46,000 cheques for Rs. 40 billion were issued this year against 13,000 cheques for Rs 16 billion last year as refund amount, he added. “We want to facilitate the tax payers and in this regard the Federal Board of Revenue (FBR) reformed its refund system. It has refunded a record amount during this year”, he said.Dr Hafeez said that tax on cash withdrawal from banks had been reduced from 0.03 per cent to 0.02 percent.
He dispelled the impression that allocation for education and health had been reduced, saying that finances for these areas were being given to the provinces, which were now responsible to bring development in health, education and other social sectors.
He said the debt to GDP ratio remained 55.5 per cent till March 2011.He attributed the debt burden to be a big gap between less resources and high expenditures.
He said the government was making all out efforts to explore new avenues for resources mobilization and reduce expenditures through austerity measures to contain fiscal deficit for achieving self-reliance.
He said the government had not crossed the debt limit under the Fiscal Responsibility and Debt Limitation Law and “our debt is within the limit of law”.
He said that last year, floods caused US $ 10 billion or Rs.855 billion losses to the national economy. This also affected the GDP growth . Therefore the GDP ratio for the current fiscal year was 2.4 per cent
against the target of 4.5 per cent.
Dr Hafeez Shaikh refuted the impression that the budget document was prepared by the International Monetary Fund (IMF). It had been prepared by an elected government, he added.
The Minister, however, said,”the government takes every stakeholder into confidence and seeks their inputs and suggestions before the preparation of the budget”.
“Pakistan has a relationship with the IMF as an international organization like World Bank, Asian Development Bank, Islamic Development Bank”, he said.
Dr. Shaikh said that every country under a banking system takes loans for programmes from the IMF under certain charter or code for the short-term development and improve balance of payment position.”We have also done the same “, he added He said five-year tax exemptions would be given for those investors who would set up an industrial unit from their own resources.
He said the incentive would be provided to those investors who would invest their own capital for building a factory or unit.
The incentive would help tackle the increasing unemployment in the country besides reducing the recruitment burden on government institutions, he added.He said the government would provide incentives to all other sectors including stock market, financial sector and business community to create more
job opportunities and for economic growth.Dr Shaikh said that the country’s exports had increased by 27 % in first ten months of current fiscal thus paving the way to surpass $ 24.5 billion mark.
He said the remittances from overseas Pakistanis were likely to cross $ 11 billion.He said the FBR had collected Rs 1320 billion in 11 months with an increase of 16 % over the last year. He said that 4 per cent GDP growth rate had been set for 2011-12.
He hoped that FBR would be successful in meeting the tax collection target of Rs. 1588 billion during this fiscal year.
He said during June the FBR needed to collect Rs. 270 billion and “I and FBR management are quite sure to meet the set target.”
He said that “we are determined to provide maximum relief to the public by abolishing all taxes except the income tax and sales tax”.
“In order to increase the tax revenue, we have identified more than 700,000 rich people and as many as 70,000 of them have been issued notices”, he added.
He said that the federal excise duty on 15 items had been totally abolished while duty on beverages was reduced from 12 to 6 per cent and on cement from Rs.700 to Rs. 500 per ton.
He further said that special excise duty on 100 items and regulatory duty on 392 items had been abolished. He said that the minimum annual taxable income was increased from Rs.300,000 to Rs. 350,000.
He said that instead of providing subsidy on oil and electricity,which is equally utilized by both the rich and the poor, the government focused on the vulnerable segments. Some 50 billion had been allocated for the Benazir Income Support Programme (BISP) which he said could be increased if the financial position gets better.
Besides, he said the government would be spending on microfinance programmes aimed at improving the living standard of the poor.
He said efforts were made to resolve the circular debt issue and overcome energy shortage.
Hafeez said the government had provided subsidy of Rs.180 billion this year against Rs.250 billion last year. Reduction in the subsidy would not affect the common man, he added.
The Finance Minister opined that the budget of a single year could not resolve the issues of past 62 years. Budget was just one aspect of the overall economic affairs which contained annual estimates and expenditures.
He said, unlike past practice, price fixation was not announced in the annual budget but it was desirable that prices were fixed by regulators like PTA, NEPRA and OGRA.
The Finance Minister said the government was making procurement of essential edible items, including wheat and sugar to establish strategic reserves for overcoming possible shortage to reduce dependency on imports.“In order to increase the tax revenue, we have identified more than 700,000 rich people and as many as 70,000 of them have been issued notices”, he added.
He said that the federal excise duty on 15 items had been totally abolished while duty on beverages was reduced from 12 to 6 per cent and on cement from Rs.700 to Rs. 500 per ton.
He further said that special excise duty on 100 items and regulatory duty on 392 items had been abolished. He said that the minimum annual taxable income was increased from Rs.300,000 to Rs. 350,000.
He said that instead of providing subsidy on oil and electricity,which is equally utilized by both the rich and the poor, the government focused on the vulnerable segments. Some 50 billion had been allocated for the Benazir Income Support Programme (BISP) which he said could be increased if the financial position gets better.
Besides, he said the government would be spending on microfinance programmes aimed at improving the living standard of the poor.
He said efforts were made to resolve the circular debt issue and overcome energy shortage.
Hafeez said the government had provided subsidy of Rs.180 billion this year against Rs.250 billion last year. Reduction in the subsidy would not affect the common man, he added.
The Finance Minister opined that the budget of a single year could not resolve the issues of past 62 years. Budget was just one aspect of the overall economic affairs which contained annual estimates and expenditures.
He said, unlike past practice, price fixation was not announced in the annual budget but it was desirable that prices were fixed by regulators like PTA, NEPRA and OGRA.
He dispelled the impression that allocation for education and health had been reduced, saying that finances for these areas were being given to the provinces, which were now responsible to bring development in health, education and other social sectors.
He said the debt to GDP ratio remained 55.5 per cent till March 2011.He attributed the debt burden to be a big gap between less resources and high expenditures.
He said the government was making all out efforts to explore new avenues for resources mobilization and reduce expenditures through austerity measures to contain fiscal deficit for achieving self-reliance.
He said the government had not crossed the debt limit under the Fiscal Responsibility and Debt Limitation Law and “our debt is within the limit of law”.
He said that last year, floods caused US $ 10 billion or Rs.855 billion losses to the national economy. This also affected the GDP growth . Therefore the GDP ratio for the current fiscal year was 2.4 per cent
against the target of 4.5 per cent.
Dr Hafeez Shaikh refuted the impression that the budget document was prepared by the International Monetary Fund (IMF). It had been prepared by an elected government, he added.
The Minister, however, said,”the government takes every stakeholder into confidence and seeks their inputs and suggestions before the preparation of the budget”.
“Pakistan has a relationship with the IMF as an international organization like World Bank, Asian Development Bank, Islamic Development Bank”, he said.
Dr. Shaikh said that every country under a banking system takes loans for programmes from the IMF under certain charter or code for the short-term development and improve balance of payment position.”We have also done the same “, he added He said five-year tax exemptions would be given for those investors who would set up an industrial unit from their own resources.
He said the incentive would be provided to those investors who would invest their own capital for building a factory or unit.
The incentive would help tackle the increasing unemployment in the country besides reducing the recruitment burden on government institutions, he added.He said the government would provide incentives to all other sectors including stock market, financial sector and business community to create more
job opportunities and for economic growth.Dr Shaikh said that the country’s exports had increased by 27 % in first ten months of current fiscal thus paving the way to surpass $ 24.5 billion mark.
He said the remittances from overseas Pakistanis were likely to cross $ 11 billion.He said the FBR had collected Rs 1320 billion in 11 months with an increase of 16 % over the last year. He said that 4 per cent GDP growth rate had been set for 2011-12.
He hoped that FBR would be successful in meeting the tax collection target of Rs. 1588 billion during this fiscal year.
He said during June the FBR needed to collect Rs. 270 billion and “I and FBR management are quite sure to meet the set target.”