ISLAMABAD, 2 June 2003 — An investment-friendly, pro-business Pakistani budget is ready for fiscal 2004 that starts July 1.
This is what comes out of the official statements from Prime Minister Mir Zafarullah Khan Jamali, to Finance Minister Shaukat Aziz, and top domestic and foreign business leaders and investors who just have had discussions with the government’s economic managers.
The environment is filled with buoyancy and hope that, among others is reflected too, by the bourse shooting up and establishing a life-time record of the benchmark Karachi Stock Exchange KSE-100 with 3,126.24 points in May that slid back to 3,116.82 this week.
What Jamali says about the forthcoming budget, will be music to the ears of businessmen. “Tax burden will be reduced in the new budget to encourage business, discourage tax-dodgers, and motivate the people to pay their dues in full. Tax exemptions and reduced tax rates will enable the government to collect more revenues for development projects. The government will also give all possible business incentives in the budget.
The investments made during my government will face no seizure, nor any private foreign currency deposits will be frozen, as was done one of the previous governments,” Jamali assured a group of businessmen.
“Pakistan is full of opportunities for investment. Our under construction deep-sea port at Gwadar, on the fringe of the Gulf of Oman, one of the biggest projects ever undertaken by this country, will change the outlook of Pakistan,” Jamali also said while inviting foreign, particularly, Gulf investors.
Islamabad, besides encouraging domestic private investors and foreign direct investment (FDI), will itself ensure a record Rs.160 billion or close to $2.75 billion government spending during fiscal 2004 on development and social sectors, that will boost growth in a number of sectors, including water, power, roads and highways, education and health, Aziz says. It will also enlarge imports. “It will be a pro-growth, and pro-poor budget,” he told Pakistani parliamentarians, businessmen and economists.
What has prompted this buoyant mood among the budget-makers? The government was able to cut the budget deficit in the current fiscal 2003 that ends June 30, down to 4.6 percent of GDP, as agreed with foreign donors and international financial institutions.
The deficit will be reduced to 4.0 percent in fiscal 2004. Inflation rate in 2004 will be restricted to 3.9 percent, somewhat higher than the officially estimated 3.5 percent in 2003, as the government is committed to keeping it under 4.0 percent. The monetary expansion in 2004 will be 11.3 percent, and development spending 3.4 percent of GDP.
However, there is strong criticism of the government’s actions to reduce the budget deficit. The poverty, over the last three years has also increased from 36 to 42 percent of the population, critics say. The government also projects the forex reserves to reach $11.54 billion, a billion higher than the present level.