Pak to spend ‘bare minimum’ $6 billion to boost growth

Finance chief sees this year’s fiscal deficit just above 7%; targets 5% GDP growth next fiscal year to create new jobs Pakistan plans to boost spending on large infrastructure projects by as much as 40 per cent to create jobs and foster productivity in an economy crippled by the coronavirus pandemic,

Finance Minister

Shaukat Tarin said.

The federal government will earmark as much as $6 billion for development expenditure in the year beginning

July, Tarin, who took office last month, said in an interview in

Islamabad. The economy needs to expand by 5 per cent next year, he said.

“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month for the world’s fifth mostpopulous nation. “There are almost 110 million youth.”

Tarin’s plan will reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimates to be a little above 7 per cent of GDP in the current fiscal year through June, against 8.1 per cent in the previous year. Tarin said he expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower. While balancing the budget will be key for Pakistan’s current $6 billion loan program with the IMF, the new finance minister is negotiating with the organisation for more wriggle room to support economic growth.

The government’s GDP target for next year is a percentage point higher than the IMF’S 4 per cent projection, and Tarin is seeking to boost growth to 6 per cent in the year after. The Washington-based lender sees the economy expanding 1.5 per cent in the current fiscal period after a rare contraction last year. “We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”