ISLAMABAD - The federal cabinet on Thursday approved the Budget Strategy Paper (BSP) 2017-20, fixing economic growth target at 6 percent and budget deficit at Rs3.8 percent of the GDP for the next financial year 2017-18.

The special federal cabinet meeting chaired by Prime Minister Nawaz Sharif gave approval for BSP, which was presented by Finance Minister Ishaq Dar. The government has already decided to announce the budget for the fiscal year 2017-18 on May 26.

Sources in the finance ministry told The Nation that the total outlay of the budget could be around Rs4.6 to Rs4.8 trillion for next year against Rs4.395 trillion of the ongoing year. The government has kept the economic growth at 6 percent for the next financial year as against 5.7 percent of the outgoing year.

Meanwhile, the government has decided to fix budget deficit target at 3.8 percent of the GDP for the year 2017-18 as compared to revised target of 4.1 percent of the GDP of the year 2016-17.

The tax collection target for the Federal Board of Revenue (FBR) has been fixed at above Rs4 trillion for next year, which was Rs3621 billion for the current year. The government in BSP has proposed to keep Rs700 billion for the Public Sector Development Programme (PSDP) and Rs150 billion for rehabilitation of war affected areas and the prime minister’s special programmes. The government is likely to earmark a major chunk for energy and infrastructure projects under the PSDP ahead of the next elections.

The government is likely to keep around Rs950 billion for the defence for the next financial year as against Rs860 billion of the previous year. The country’s defence budget had increased by 10 to 11 percent in the last few years.

Addressing the cabinet meeting, the prime minister said that the focus of the next year’s budget would be on achieving higher, sustainable and inclusive growth. He directed the cabinet members to accord priority to the areas under their domain that could lead to improved economic growth and generate additional employment opportunities.

He said that the government was determined to increase investments in both human and physical infrastructure. In this regard, highest priority would be accorded to increase in development budget and poverty reduction. He said that the time has come for the nation to reap the benefits of the economic policies of the government.

The prime minister asked the cabinet members to suggest measures which would discourage Hundi and other informal channels for money transactions leading thereby to increased foreign remittances through regular channels. The premier appreciated market capitalisation in the stock exchange that would soon touch $100 billion.

The finance minister said that the government had devised a medium-term macroeconomic strategy to increase foreign reserves and reduce fiscal deficit. He said that as per the Fiscal Responsibility and Debt Limitations Act, the fiscal deficit of the federal government would be brought down to 4% of GDP by June 2020. The upcoming budget will demonstrate fiscal prudence while focusing on key investment sectors such as the CPEC, energy, communications, poverty reduction etc. He said that fiscal prudence will provide impetus to lower inflation, higher investments and low public debts.

The finance minister also said that the government had initiated a study on the evaluation of the GDP as many sectors were currently not fully recorded in the national accounts. For the budget year 2017-18, he said, the government would aim to achieve 6 percent of economic growth and enhance efforts to increase revenue generation. The meeting was also informed about the government’s resolve to provide incentives to the farmers for enhancing agriculture productivity. It was apprised that the prime minister’s agriculture package has yielded a positive impact on the agriculture output as demonstrated by bumper crops of sugarcane, wheat and maize.

The finance secretary made a detailed presentation on the current state of the economy, outline of the budget 2017-18 and the medium-term macroeconomic framework. He told the meeting that despite challenges, Pakistan’s economy was moving in the right direction. He said that the inflation has been contained to 4.9% in the first nine months of the current financial year. He said that the credit to private sector has grown by 53% and agriculture credit has risen by 23% in the first ten months as compared to the same period last year. In order to achieve 6 percent of economic growth, the finance secretary said, measures will be taken to enhance growth in agriculture, industrial and services sectors of the economy.