ID :
168713
Wed, 03/16/2011 - 13:42
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Shortlink :
http://m.oananews.org//node/168713
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Government Announces measures to stabilize Economy and Secure Public Finances
- Press Note issued by Press Information Department (PID)
Islamabad, March 15, 2011 (PPI): Following is the text of press note issued by Press Information Department (PID)
Quote
The Government of Pakistan is committed to stabilizing the economy and pursuing its reforms agenda despite the shocks of unprecedented floods and rising oil prices. The determination and resolve of the government is beginning to show visible results.
These improvements include:
(1) The budget deficit, which some observers had predicted to cross 8% has been reigned in and will be under 5.5% of GDP;
(2) Recourse to SBP borrowings has aggressively managed. SBP borrowing stood at Rs.68 billion at End-February 2011 from a high of Rs.321 billion reached during the first half;
(3) Inflation rates have begun to decline for the last two months. During February 2011 the CPI was 12.9% significantly down from 15.7% recorded in December, 2010;
(4) The external sector has shown extraordinary performance. Exports have increased by 26% in the last eight months. For February 2011, growth in exports was at historic 46%. Exports at this rate are likely to cross $25 billion.
(5) Remittances will surpass the $11 billion mark, which will also be historic.
More works remains to be done to ensure that these gains are consolidated and a solid foundation is laid for stability, growth in the economy and the prosperity of the citizens.
The government has decided to further control expenditures and to raise revenues to secure the public finances.
The following expenditure control measures for remaining part of the budget year will be effective immediately:
POL Entitlements, Purchase of Stationary and Travelling Allowance: The expenditures on these heads are cut by half.
Purchase of Durable Goods: There will be a complete ban on purchase of durable goods.
Ban on Fresh Recruitment: There will be ban on fresh recruitment unless process already initiated through proper advertisements.
Surrender of budgetary allocations beyond last year’s level: An exercise was undertaken successfully to secure surrender of excessive budgetary allocations over and above the last year.
Other savings: Numerous other small heads of account relating to grants to entities and bodies outside the government have been closely examined and savings effected.
Rationalisation of PSDP: The PSDP has been rationalized while protecting projects in social sectors, less-developed areas and of strategic significance.
The combined impact of these measures will be Rs.120 billion. Revenue Measures
The following additional revenue measures have been adopted to partially offset the increase in expenditure demands on account of floods, foregone revenues due to postponement of RGST and to remove inequities in the tax system:
1. One-time surcharge of 15% on income tax payable for the remaining period of tax year 2010-11.
2. Additional special excise duty (SED) of 1.5% on items already subjected to SED for the remaining period of tax year 2010-11.
3. Withdrawal of exemption of sales tax on fertilizer, pesticides and tractors. The facility of zero-rating on plant, machinery and equipment including parts thereof has also been withdrawn.
4. Zero-rating on five major export oriented sectors (textiles, carpets, leather, sporting goods and surgical goods) has been restricted to registered exporters and manufacturers-cum-exporters for export purpose only.
5. A clear distortion visible in the assessable value of sugar by artificially limiting it to Rs. 28.88 per kg has been removed. The ex-factory price shall hitherto be the prescribed price for levy of sales tax on sugar. However, to protect the consumers, special rate of 8% for levy of sales tax on sugar has been retained. These measures would assist in achieving the revenue target of Rs.
1600 billion during 2010-11.
Islamabad, March 15, 2011 (PPI): Following is the text of press note issued by Press Information Department (PID)
Quote
The Government of Pakistan is committed to stabilizing the economy and pursuing its reforms agenda despite the shocks of unprecedented floods and rising oil prices. The determination and resolve of the government is beginning to show visible results.
These improvements include:
(1) The budget deficit, which some observers had predicted to cross 8% has been reigned in and will be under 5.5% of GDP;
(2) Recourse to SBP borrowings has aggressively managed. SBP borrowing stood at Rs.68 billion at End-February 2011 from a high of Rs.321 billion reached during the first half;
(3) Inflation rates have begun to decline for the last two months. During February 2011 the CPI was 12.9% significantly down from 15.7% recorded in December, 2010;
(4) The external sector has shown extraordinary performance. Exports have increased by 26% in the last eight months. For February 2011, growth in exports was at historic 46%. Exports at this rate are likely to cross $25 billion.
(5) Remittances will surpass the $11 billion mark, which will also be historic.
More works remains to be done to ensure that these gains are consolidated and a solid foundation is laid for stability, growth in the economy and the prosperity of the citizens.
The government has decided to further control expenditures and to raise revenues to secure the public finances.
The following expenditure control measures for remaining part of the budget year will be effective immediately:
POL Entitlements, Purchase of Stationary and Travelling Allowance: The expenditures on these heads are cut by half.
Purchase of Durable Goods: There will be a complete ban on purchase of durable goods.
Ban on Fresh Recruitment: There will be ban on fresh recruitment unless process already initiated through proper advertisements.
Surrender of budgetary allocations beyond last year’s level: An exercise was undertaken successfully to secure surrender of excessive budgetary allocations over and above the last year.
Other savings: Numerous other small heads of account relating to grants to entities and bodies outside the government have been closely examined and savings effected.
Rationalisation of PSDP: The PSDP has been rationalized while protecting projects in social sectors, less-developed areas and of strategic significance.
The combined impact of these measures will be Rs.120 billion. Revenue Measures
The following additional revenue measures have been adopted to partially offset the increase in expenditure demands on account of floods, foregone revenues due to postponement of RGST and to remove inequities in the tax system:
1. One-time surcharge of 15% on income tax payable for the remaining period of tax year 2010-11.
2. Additional special excise duty (SED) of 1.5% on items already subjected to SED for the remaining period of tax year 2010-11.
3. Withdrawal of exemption of sales tax on fertilizer, pesticides and tractors. The facility of zero-rating on plant, machinery and equipment including parts thereof has also been withdrawn.
4. Zero-rating on five major export oriented sectors (textiles, carpets, leather, sporting goods and surgical goods) has been restricted to registered exporters and manufacturers-cum-exporters for export purpose only.
5. A clear distortion visible in the assessable value of sugar by artificially limiting it to Rs. 28.88 per kg has been removed. The ex-factory price shall hitherto be the prescribed price for levy of sales tax on sugar. However, to protect the consumers, special rate of 8% for levy of sales tax on sugar has been retained. These measures would assist in achieving the revenue target of Rs.
1600 billion during 2010-11.
