Minister for Finance Affairs Shaukat Tarin has said that Pakistan planned to boost spending on large infrastructure projects by as much as 40 percent to create jobs and foster productivity in an economy crippled by the coronavirus pandemic.
In an interview with Bloomberg, he said that the federal government would earmark as much as Rs 900 billion (six billion dollars) for development expenditure in the year beginning July 2021. He said that the economy needed to expand by five percent next year.
“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month. Tarin, a former banker, was appointed last month as the fourth finance minister since Prime Minister Imran Khan’s government took power in 2018.
He also served in the role between 2008 and 2010, helping the nation avoid default by securing a bailout from the International Monetary Fund. He came into office as Pakistan faced a third wave of coronavirus cases, prompting authorities to order a week-long shutdown that might weigh on economic activity and hurt incomes.
Tarin’s plan would reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimated to be a little above seven percent of gross domestic product in the current fiscal year through June, against 8.1 percent in the previous year, the Bloomberg reported.
TWO MILLION JOBS EVERY YEAR
Tarin said he expected the deficit in the next fiscal to be one or 1.5 percentage points lower. While balancing the budget would be key for Pakistan’s current six billion dollars loan program with the International Monetary Fund (IMF), the finance minister was negotiating with the organization for more wriggle room to support economic growth, it reported.
The government’s Gross Development Product target for the next year was a percentage point higher than the IMF’s four percent projection, and Shaukat Tarin was seeking to boost growth to six per cent in the year after. “We need two million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”
SUKUK BOND
The State Bank of Pakistan, which has cut interest rates to a three-year low to support the economy, has been on pause mode for a while and has left some of the heavy lifting to the government. “First we have to get more revenues,” Tarin said, adding that he was targeting about six trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target.
“Unless we get more revenues, forget about any incentives to boost the economy.” On talks with the IMF, he said, “All we are saying is that we are just basically going to give them alternate ways of achieving the same objective” including revenue generation and reducing energy debt, adding, “the aim is for this to be the last IMF bailout in Pakistan’s history.”
He said that his government planned to tap undrawn allocated funds from the Asian Development Bank and the World Bank that total $20 billion, adding that it also aimed to increase tech exports to eight billion dollars in two years, from an estimated two billion dollars this fiscal year, a sector he said that he aimed to support. He said the government also planned to soon launch global sukuk bond.