Economic revival govt's key concern: Gilani

ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani said on Friday that revival of the economy was key concern of his government and noted with satisfaction that the coming financial year would open window for resumption of growth cycle.

"We have earmarked Rs 730 billion for the Public Sector Development Programme (PSDP), including provincial allocations. This development expenditure will indeed trigger a multiplier effect on the entire economy," he said.

He was addressing the special Cabinet meeting to discuss and approve budgetary proposals for the year 2011-12.

He said there was no room for complacency and urged the economic team and line ministries to proactively work in the coming year in core areas of power sector reform, revitalizing of tax machinery to improve tax to GDP ratio, fast track development of hydel projects and better governance in the bleeding public sector corporations.

He said, "while formulating this year's PSDP, I have specifically asked the Planning Commission to consolidate ongoing projects, rather than throwing money after projects, which eventually turn into a wasteland of development".

"This way scarce resources will be concentrated in projects which are substantially complete and ensure optimal results," he said.

He expected the budgetary proposals to be pro-poor and enhance investment in social protection programmes. He mentioned the Benazir Income Support Programme (BISP) as a flagship programme of the government, aimed at providing a targeted and transparent social safety net for poor people.

Gilani said Pakistan was entering into the new financial year after tremendous fiscal stress in the current financial year as the economy was devastated by unprecedented floods causing damages to the tune of Rs.800 billion as per independent estimates.

He mentioned the prolonged power outages which resulted in income losses for households, businesses and industry impeding GDP growth.

He said deteriorating security situation imposed further costs on the economy in the shape of increased security spending and re-settlement of Internally Displaced Persons.

He said rising inflation due to 45 percent rise in Global Commodities Prices Index and consequent financing costs of fiscal deficit compounded both core inflation and Consumer Price Index (CPI). However, he expressed satisfaction that the External Sector showed signs of stability.

Gilani said the government was expecting to close a record year of exports and home remittances at 24 billion US dollars and 12 billion US dollars respectively.

He said these two factors had cushioned the economy against high oil and commodities prices. This will help ease the balance of payments and also support the foreign reserves which are at an all time high of 17 billion US Dollars, he added.

The prime minister said the country suffered major declines in production of rice and cotton by 30 percent and 11 percent respectively, the record wheat production had given breathing space.

He mentioned that for the first time in 10 years, Pakistan was now exporting wheat.

However, he said the high inflation had prevented any relaxation of the monetary policy. (APP)