Pak plans record 2007-08 development budget

Islamabad, May 30 | Updated: May 31 2007, 05:30am hrs
Pakistan plans to boost development spending to a record Rs 520 billion ($8.56 billion) in its 2007-08 budget, taking advantage of strong economic growth, a senior government official said on Wednesday.

Development spending will be nearly 20% higher compared with an estimated Rs 435 billion for the current fiscal year, ending on June 30. The 2007-2008 budget is due to be announced on June 8.

"The record allocation for development is made on the basis of available resources after a robust performance by the economy," said an official at the planning commission responsible for preparing the development budget.

The National Economic Council, the highest decision-making body on the budget, is due to meet on Thursday to make final decisions on budget allocations. According to media reports, a total outlay of Rs 2.1 trillion is expected for the 2007-08 budget, which would be nearly 60% higher than the Rs 1.3 trillion budget for 2006-07. Reuters

The government expects the economy to grow 7.02% this year. It is expected to raise the growth target to 7.20% for the 2007/08 fiscal year, said the official, who declined to be named.

Of the total Rs 520 billion development budget, Rs 485 billion will be spent on infrastructure and social sector development and Rs 35 billion on rehabilitation in areas hit by a big earthquake in October 2005, the official said.

"Increased spending on the social sector shows the government's commitment to provide better education and health services, especially for the poor," the official said. Reuters

some improvement, poverty is still widespread in Pakistan with 23.9% of the population living in poverty in 2004/05 compared with 34.5% in 2000/01. Reuters

And the poor have been hit hard by rising prices, economists say. Average inflation was likely to be close to 7.8% for the 2006/07 fiscal year, against a full-year target of 6.5 %.

Average annual 7% GDP growth over the past four years has pushed revenue collection to record levels, with the government expecting to collect 830 billion rupees this year, the official said.

The government is likely to set a revenue target of 1 trillion rupees for the 2007/08 fiscal year but the tax-base remains narrow with only about 1.36 million people out of a population of 160 million registered as tax payers. Reuters