After several hours consultations in more than one meetings on budgetary targets, the government on Tuesday finalised Rs 520 billion Public Sector Development Programme (PSDP) and Rs 1 trillion revenue target for 2007-8.
These targets will be presented to the National Economic Committee (NEC) for its approval, scheduled to meet here on May 31. Prime minister, Shaukat Aziz, will chair the meeting. The government is still indecisive on the issue of increase in salaries/pensions of the government employees and relief to low-income group and these issues will now be decided by the NEC.
The Finance ministry has worked out different ratio with their overall impact on the next budget for increase in salaries/pensions of the government employees. It is also believed that the government will revise upward minimum wages for the public and private sector employees, besides announcing special measures for relief to the poor in the next budget. These measures will be presented to NEC for its approval.
An official privy to Tuesday's meeting decision told Business Recorder that next budget would be tax free as the government plans to increase tax base to achieve enhanced target and the same metrology will be presented in NEC meeting.
The Annual Plan Co-ordination Committee (APCC) had approved Rs 549 billion PSDP for the next fiscal year in its meeting early last week. However, its estimates were revised down after Finance ministry's strong opposition. The Finance ministry's officials had told a high level meeting chaired by the prime minister that major increase in PSDP size would widened current account deficit next year.
The government is facing huge current account deficit and it's a serious worry for its economic team. Even after unprecedented inflows of foreign direct investment (FDI) and remittances that will be around $12 billion by June 30, and using untraditional ways such as global bond issue, it is yet to plug the current account deficit.