ISLAMABAD, 31 May 2004 — The proposed national budget for fiscal 2005 cuts customs duties on hundreds of items and heeded demands for tax breaks.
The budget, to be unveiled June 5, is hoped to invigorate the stagnated economy. At present, more than 32 percent of Pakistan’s 145 million people live below the one-dollar-a-day poverty line, despite government claims to the contrary. Independent analysts put the poverty figure at 42 percent. Rising inflation is fast eroding the purchasing power of workers who suffer from frozen wages. Another problem is entry into the WTO. Many Pakistani industrialists are still quite apprehensive, fearing it will force them into fiercer global competition, cut down their traditionally high profits and erode exports.
Chief architect of the present economic policies, Finance Minister Shaukat Aziz, said the GDP growth that rose from a targeted 5.3 percent to 6.0 percent in the current fiscal year, generated more income than expected. The 6.6 to 6.8 percent growth projected for 2005 by the high-level Annual Plan Coordination Committee (APCC) should cut poverty, he claimed.
Aziz, this week, singled out “inflation as one of the main challenges to the economy.” Other challenges are “fluctuating international oil and wheat prices which are disturbing factors,” he admits. Annual inflation in 2005 is projected to rise to 4.5 percent, up from 4.0 percent in 2004.
Realizing the severity of the problem of poverty, Prime Minister Mir Zafarullah Khan Jamali has asked Ministry of Finance to prepare “a people friendly, but pro-investment budget.” He told his cabinet that his government is “committed to provide the people with the maximum possible relief, with special focus on the lower income groups.”
Keeping this advice in view, Aziz assured National Assembly’s Standing Committee on Economic Affairs, “the government will not introduce any new taxes in the budget, but there will be adjustments in the existing taxation to maximize the tax collection.”