The Economic Advisory Council (EAC), established last week, will hold its first meeting on Monday to give the government its inputs on fiscal side, which would play an important role in the 2008-09 budget making.
Minister for Privatisation and Investment Naveed Qamar, who heads the Council, told Business Recorder on Sunday that the inaugural meeting would discuss fiscal deficit and other economic challenges faced by the government.
The Council would give its inputs to the government for budget making, which is the most daunting task for the government, Qamar said, who holds the additional charge of Finance Ministry.
Sources said that the EAC would discuss budget making and the likely allocation for the different heads including defence and development. They said that Ministry of Defence has been demanding a handsome increase in its budget for the next fiscal year as the armed forces are concentrating on more professional training and improving the wellbeing of the soldiers. For this purpose, the Army chief has already announced around Rs 10 billion. Sources said that this amount is required to be increased further. The militancy in FATA and NWFP and the operation against it is also having some cost though it is largely reimbursed by the US.
According to sources, as the government is facing a large fiscal deficit, the allocation for development budget would also come under severe scrutiny. Some reports suggest that the proposed allocation for the PSDP 2008-09 would be Rs 535 to 550 billion. But due to severe shortage of resources, this allocation might not be more than Rs 450 or Rs 480 billion for the next fiscal year, if the government wanted to bridge the fiscal deficit.
When Ishaq Dar was finance minister, he had indicated that there could be a cut on development budget, but he remained short of telling this in detail. The other issue, which will come up for discussion of the meeting, will be the possible increase in the salaries of the government employees. Naveed had informed the Senate in its last session that the government would give relief to its employees. The EAC would discuss how much additional resources would be required if the government decided to increase the salaries of its employees.
The energy crisis is also expected to come under discussion during the meeting, sources said. However, the Minister said that the energy crisis would not come exclusively in a separate perspective, but its economic aspects would definitely be discussed.
The Prime Minister, on special instructions of Asif Zardari, has constituted the EAC to provide independent advice to the government on formulation and implementation of economic policies and reform agenda.
The EAC members include Shaukat Tareen, Salman Farooqi, Deputy Chairman Planning Commission, Hina Rabbani Khar, advisor to the PM on finance, Shahnaz Wazir Ali, Bashir Ali Muhammad, Mian Tariq Saigal, Farooq Rehmatullah, Saleem Raza, Saqib Shirani. The council has been authorised to co-opt members as considered appropriate.