Pakistan hopes that a billion-dollar boost to the housing and infrastructure sectors will create one million new jobs for its impoverished people as it is set to unveil its forthcoming budget.
Economic planners said the 2004-2005 budget, to be announced in parliament this Saturday, will allocate almost half of a generous new development-spending package to housing and infrastructure.
"We plan to allocate an unprecedented Rs 202 billion (about 3.5 billion dollars) for the development budget next year, which is targeted to generate 1.07 million jobs," national economic advisor Ashfaq Hasan Khan said AFP, adding that Rs 87 billion are earmarked for housing and infrastructure projects.
"Our focus is housing and other infrastructure projects as they create all manner of jobs from engineers to masons, artisans and labourers," Khan said.
Unemployment runs as high as 9.9 percent in urban areas of the Islamic republic of 150 million people, up from 8.0 percent in 1999, according to the Economic Survey of Pakistan. Nation-wide it was calculated at 7.8 percent, up from 5.9 percent in 1998.
Another Rs 33.4 billion in the coming budget is earmarked for education and health. Though this makes up less than one percent of GDP, it marks a 12 percent increase on last year's commitment.
In comparison, defence spending last year took up 4.26 percent of GDP.
Khan, who would not reveal details of new spending allocations other than development, defended Pakistan's military spending.
"The defence budget has been on the decline for the past several years in terms of GDP, but we will continue to meet our due defence needs," he said, without indicating whether defence spending would rise or fall.
He said the new budget would, however, target poverty, which has risen from 20 percent to 33 percent over the past 15 years.
"We want to make a credible dent in the poverty rate with sustainable real per capita income in the range of 5.0 to 5.5 percent," Khan said.
The State Bank of Pakistan believes reversing the growth of poverty cannot take place until economic growth reaches a sustained rate of 6.0 percent over the next four years.
"In view of this realisation we are contriving to reach a higher growth rate of 7.0 to 8.0 percent in the next three to four years," Khan said.
The current budget aimed for a GDP growth rate of 5.3 percent.
But analysts believe the target will be exceeded to reach around 6.4 percent due to strong growth in large-scale manufacturing, which rose 13.17 percent in the nine months to March, and in exports, which broke through 10 billion dollars this fiscal year and reached 11 billion dollars in May.
Tax revenue collection grew 10 percent, also contributing to strong GDP growth.
But critics said higher growth alone could not bring poverty down.
"In the 1960s GDP grew on average 6.0 percent but poverty was as high as 40 percent then," said the professor of public finance at Institute of Business Administration (IBA), Karachi, Masood Qazi.
Pakistan currently allocates about half its resources to non-productive debt re-payments and defence expenditure.
"What the country is faced with is the challenge of redistribution of resources," Qazi told AFP, advocating application of the "big push theory" which calls for concentrated public investment on one sector.
The agriculture sector, which currently accounts for about 27 percent of Pakistan's GDP and engages over 40 percent of the workforce, has "enormous potential," he said.