Salman predicts a deficit budget for 2009-10

Former Federal finance minister and leading economist Dr Salman Shah has predicted a deficit budget for 2009-10 due to failure in achieving revenue targets set for the 2008-09 fiscal year. Addressing a pre-budget seminar, organised by the Pakistan Muslim League-Q, here on Thursday, Dr Salman Shah maintained that five percent deficit budget for the 2009-10 fiscal year would be presented.
Currently, the growth rate of the national economy was only 2.5 percent as compared to five percent last year, he said. He said that the main reason of this decline was surge in interest rate on foreign loans, besides nine percent cut in production because of following policies of the International Monetary Fund (IMF).
He further said the government was engaged in borrowing from banks and the government would have to pay Rs 650 billion in 2009-10 fiscal year on payments of internal and external loans. If the government did not receive foreign aid ahead of the budget, he also feared increase in ratio of unemployment and price hike.
He said the development sector would badly suffer, if foreign aid were not received. Dr Salman Shah further said expenditures on internal security matters were increasing. He called for reviewing the small and medium enterprise (SMEs) sector to help stabilise the economy.
He said during the current year, there was 25 percent price spiral, while difficult time was ahead for the people, as the government would have to further increase power tariff. He also said the Punjab government also failed in achieving the targets set for revenue growth for the current fiscal.
"If the oil prices would increase in the international market in time ahead, there might by economic crisis in the country, as it would result in energy crisis," he added. Nevertheless, increase in oil prices in the international market would enhance production cost of thermal power generation, he opined.
The former advisor to prime minister on economic affairs also stressed the need for construction of Kalabagh Dam to overcome power crisis. The construction of this vital project must be initiated immediately after developing consensus of all the provinces on this project, he added. He said the previous governments also made efforts to develop consensus on Kalabagh Dam. Now when all the parties were in the government, attention should be paid to achieve consensus for Kalabagh Dam, which could be completed in just five years.
He said the government would have to focus on construction of more and more dams, as it would put an end to dependence on oil apart from ensuring food security. He said the government should focus on hydel power generation, as cheap electricity would not only help stabilise the economy, but also create job opportunities.
He further said that private power companies were working below their production capacity due to failure in meeting their running expenditures. Currently, he said there was capability in the country to produce 20,000 MW of electricity. Speaking next, opposition leader in the Punjab Assembly Chaudhry Zaheeruddin said that Kalabagh Dam was a national project, which would ensure progress and prosperity in the country.