The government’s Economic Advisory Committee met on Tuesday to discuss the upcoming Budget for the fiscal year 2021-22, where it was agreed to keep the focus on enhancing agriculture production, diversifying exports, increasing subsidies and extending the tax amnesty for the construction industry until December 31st.
The meeting was chaired by Finance Minister Shaukat Tareen where he told the committee that the ultimate goal of budget-related advisory is to stimulate growth and increase it to 6-7% over a few years to make Pakistan a competitive economy in the region.
Ease of business will also remain a top priority in the budget for next year, as further discussions on repayment and debt management will take place. It was also decided to extend cheaper electricity tariffs for the industry until October 2023 as part of a major initiative in the energy sector.
It was decided that the future budget will not resort to an aggressive tax regime, but will provide full assistance to the private sector in the completion of its own projects, as well as participation in public and private partnerships.
The Energy Expert Group recommended increasing efforts on the circulating debt of the energy sector and suggested that 40% of the remaining capacity payments are from the public electricity sector sectors, which should be considered a priority. The meeting reviewed ongoing discussions with sponsors of the remaining independent power producers, including within the CPEC, specifically on debt restructuring to reduce the accumulated outstanding Circular debt.
So far, the Ministry of Finance has allocated a subsidy of Rs 330 billion to the electricity sector for next year, while the Ministry of Energy is still advocating a subsidy of approximately Rs. 500 billion to ensure a more focused approach to reduce circulating debt.
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