Pakistan plans to boost spending on large infrastructure projects by as much as 40% to create jobs and foster productivity in an economy crippled by the coronavirus pandemic, Finance Minister Shaukat Tarin said during an interview with the Bloomberg’s Faseeh Mangi on Thursday.
The federal government will earmark as much as 900 billion rupees ($6 billion) for development expenditure in the year beginning July, said Tarin who was replaced Hammad Azhar as the new finance Minister last month. The economy needs to expand by 5% next year, he said.
He is the fourth finance minister to have been appointed by PM Khan since his government came into power in 2018. Tarin, a former banker also served in the role between 2008 and 2010, helping the nation securing a bailout from the International Monetary Fund.
Tarin’s predecessor had decided to cut down spending to narrow the budget deficit, which he is not in favor of. He estimates to be a little above 7% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year. He expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower.
The finance minister is also urging IMF to show a little leniency to Pakistan after it had been hit by the third wave of COVID. He explained that unless high economic growth is achieved neither revenue collection would rise, nor job opportunities would be available to people or productive capacity of the economy could improve.
The government’s GDP goal for next year is a percentage point higher than the IMF’s 4% prediction and Tarin is looking to increase growth to 6% in the year after. The Washington-based lender sees the economy expanding 1.5% in the current fiscal period after a rare contraction last year.
“We need 2 million jobs every year,” said Tarin. “If we do not go into growth mode, we will have a major crisis on the streets.”
“First we have to get more revenues,” said the finance minister adding that he’s targeting about 6 trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”
According to Tarin, Pakistan plans to tap undrawn allocated funds from Asian Development Bank and World Bank worth $20 billion.
He also aims to increase tech exports to $8 billion in two years, from an estimated $2 billion this fiscal year, a sector he said that he aims to support.