ISLAMABAD - With the public debt soaring to Rs 14 trillion, Finance Minister Ishaq Dar on Tuesday reflected a gloomy picture of the economy while making it clear that the International Monetary Fund (IMF) would be approached for fresh loan programme to repay the previous ones.

Presenting the Economic Survey 2012-2013 on the eve of federal budget presentation in the new parliament, the economic wizard also spoke of “hard decisions” the PML-N government would have to make in the upcoming budget. The hard decisions could entail the masses paying the price for the economic bungling by the PPP government in the shape of new taxes. The minister as yet only spoke of broadening the tax net.

The economic survey highlights the overall performance of the economy during the outgoing fiscal year, providing a realistic feedback and a basis for future planning.

“There is no harm if fresh loans are taken from the IMF in order to return the previous loans,” said Dar while replying to a question regarding a new bailout package. “The government has to make a heavy repayment to the IMF by December and also in the next year.”

He said the country’s public debt had reached Rs 14 trillion by June 2013 that was only Rs 3 trillion in 1999. The PPP-led coalition government had taken loans worth Rs 7.5 trillion in its five-year tenure (2008-2013) as compared to $ 6.5 trillion taken during 50 years (from 1947 to 2007), he added.

Public debt has shown an increase of 8 percent or Rs 959 billion in a one-year period.

Debt during July-March 2012-2013 rose in particular due to domestic borrowing of Rs 8.796 trillion, representing an increase of Rs 1.159 trillion, whereas external debt soared to Rs 4.381 trillion, representing a decrease of Rs 200 billion as compared to that by the end of June 2012.

The PPP government took loans to bridge its budget deficit and did not use the same for development programmes, so people could not get any benefit, said the finance minister. The country missed almost all the targets in different sectors of the economy, he added.

Dar said that the GDP growth rate in the current fiscal year ending on June 30 remained at 3.6 against a target of 4 percent. The target for investment in the last PPP tenure was 14.9 per cent but the country is likely to achieve 14.2 per cent by the close of the year. Foreign inflows were projected at 1.8 billion dollars but these remained 800 million dollars.

The finance minister said the agriculture sector only grew by 3.3 percent as against the target of 4.1 percent and the services sector 3.7 percent against the targeted 4.3 percent.

On few positive things, large-scale manufacturing improved as its growth is expected to be 2.8 percent as against 2 percent target for the outgoing year.

Dar said that there had been shortfall of about Rs 350 billion in the revenue collection while investment target of 14.9 per cent could not be achieved as only 14.2 percent investment was recorded.

The PML-N government has prepared a roadmap for economic revival as economy is as big a challenge as terrorism, Dar said.

The cash-strapped PML-N government has set a target of 4.4 percent economic growth for the coming fiscal year, with the finance minister promising new measures to tackle crippling power cuts.

“We have set the target for GDP growth rate at 4.4 percent,” Ishaq Dar said. Rs 1,155 billion will be allocated for development in the next fiscal, he added.

He said that the fiscal deficit which had run to 8.5 per cent against the target of 4.7 percent would be curtailed by his government through “strict financial discipline”. Actual deficit figures were to be finalised late Tuesday night.

“The fiscal deficit would be brought down in the next three years,” the finance minister vowed.

Dar also promised to solve the disrupted payment cycle which has crippled the energy sector with daily power outages from 16 to 18 hours. He expressed the government’s resolve to end the circular debt issue in 60 days.

“We want to do it in minimum possible period and just finishing off this debt will not solve the problem unless we reduce our line losses or thefts which were more than 30 percent,” Dar said.

The government had set a target of 8pc for inflation in the next financial year, he added.

“We are a business-friendly government, but we will not allow industry to make undue profits as it burdens the poor,” he said, promising a “corruption-free” government to provide a conducive economic environment.

According to the economic survey, the Rs2.381 trillion tax revenue target set for FY 2012-13 has so far been missed by Rs350 billion.

Dar linked the elimination of terrorism in the country with an economic revival. He said that the war on terror had caused a loss of 80 to 100 billion dollars to Pakistan.

He said the licence to introduce 3-G technology in Pakistan would be issued in a transparent manner.

In the PPP government, the industrial sector progressed at the rate of 2.8 per cent while the investment to GDP ratio was registered at 12.6 per cent. Dar said tax net would be expanded and appealed to all citizens to pay their due taxes.

He said the PML-N government in the late 2000s touched the figure of 7 per cent GDP growth rate and the sitting government is determined to take it back to the same level in the intermediate term.

Terming the energy crisis one of the major causes of low performance of economy, Dar said almost 2 per cent of GDP growth was lost due to the energy crisis that aggravated due to circular debt and line losses.

Ishaq Dar was hopeful that despite challenges, the government had ability to put the economy on the right track. He said that there was need of structural reforms and the government would have to take some painful decisions to streamline the economy.

He said that the government had past experience of coping with challenges as it remained successful in putting the economy on right track during the sanctions period.

He said that the previous government did not conduct labour force survey in 2011-12 and 2012-13, however, it would definitely be conducted in year 2013-14.