ISLAMABAD (Web Desk) – Finance Minister Shaukat Tarin on Friday said that Pakistan plans to boost spending on large infrastructure projects by as much as 40 percent to create jobs and foster productivity in an economy crippled by the coronavirus pandemic.
In an exclusive interview with Bloomberg, he said that the federal government will earmark as much as Rs 900 billion ($6 billion) for development expenditure in the year beginning July. The economy needs to expand by 5% 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 most-populous 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% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year. Tarin said he expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower.
The government’s GDP target for next year is a percentage point higher than the IMF’s 4% projection, and Tarin is seeking to boost 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,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”
“First we have to get more revenues,” Tarin said, 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.”