ISLAMABAD - Minister for Finance, Revenues and Economic Affairs, Senator Muhammad Ishaq Dar here on Monday warned those speculators who are playing with country's exchange rate that they will burn their fingers. 'They should stay away from these anti-state activities, otherwise the government will take stern actions against these unscrupulous elements if they are held for destabilizing exchange market', he stated this while addressing a pre-budget seminar here at National Library Auditorium. The Seminar was organised by Federal Board of Revenue (FBR) in collaboration with Federation of Pakistan Chamber of Commerce and Industry (FPCCI). Secretary General Revenue Division and Chairman Federal Board of Revenue, M Abdullah Yousuf, President FPCCI, Tanveer Ahmed Sheikh and President SAARC Chamber of Commerce and Industry, Tariq Saeed also spoke on the occasion. 'These speculators should not forget the similar episode of 1998-99 when exchange rate was brought down from Rs.67 against one US dollars to Rs 53 against one US dollars in a short span of time', he remarked. He said that State Bank of Pakistan (SBP) is watching the market players very closely and it is in the speculators own interest that they should behave in national interest. The government, he said has decided to mobilize over US $ 3.0 billion during the remaining period of the current fiscal year. 'I am happy to state that strong inflows are in pipeline and the country's foreign exchange reserves will reach over US $ 13 billion by the end June 2008', he remarked. The Finance Minister further said that the State Bank of Pakistan has also taken several measures to stabilize the exchange rate last week. The rupee, he said has already gained ground and should gain more ground in coming days. Minister for Finance, Revenues and Economic Affairs, Senator Muhammad Ishaq Dar said that he was delighted to attend this important pre-budget seminar in the midst of leading industrialists and business leaders of the country. He also appreciated the FPCCI and the FBR for jointly organising this seminar. 'This is a classic example of public-private partnership in addressing the economic challenges facing the country', he remarked. The Finance Minister said that this is the most opportune time for holding pre-budget seminar as 'we are currently engage in preparing the Federal Budget for 2008-09'. The various inputs and proposals that will emanate from this seminar will be extremely useful for finalising our next year's budget, he added. Senator Muhammad Ishaq Dar further said a new democratically elected government has taken the charge of the state of affairs only last month in a difficult domestic and external environment. 'Over one year of total inaction and political expediency of the previous government on addressing domestic and external challenges, further accentuated macroeconomic imbalances', he said. As a result, the Minister said the economy of Pakistan is currently under pressure and facing four major challenges, that is deceleration in growth; rising inflation, particularly food inflation, growing fiscal deficit and widening of trade and current account deficits. Dar added that growth target for the year has been revised downward from 7.2 percent to 6.0 percent against last year's estimates of 7.0 percent. 'Poor performance of agriculture and weaker-than-expected growth in manufacturing and services are the key drivers for scaling down the growth target', he observed. The Finance Minister said that inflation in general and food inflation in particular has emerged as a major source of concern for the policy-makers in emerging and developing countries including Pakistan. Higher food prices, expansionary fiscal policy, extra-ordinary increase in government borrowing from the SBP, upward revision in local energy prices, and unanticipated increase in international commodity prices are responsible for the sharp prick up in prices in Pakistan, he remarked. 'The year is most likely to end with an average inflation of over 10 percent against the target of 6.5 percent', he maintained. Dar said that Fiscal deficit for the year was targeted at 4.0 percent of GDP. Recent data suggest that during the first nine months (July-March) of the current fiscal year, fiscal deficit has already crossed the targeted level for the year and stood at 5 percent of GDP, he remarked 'Had there been no measures undertaken by the government, the budget deficit for the year was projected at 9.5 percent of GDP', he added. He said that various factors are responsible for such a large slippage in budget deficit adding said that the first and foremost is the slippage on tax side. Weaker-than-expected tax collection owing to slower-than-targeted real GDP growth and adverse law and order situation caused slippages in tax collection. Second, failure to make adequate provision in the budget for increases in the prices of oil and food to consumers resulted in the over run of current expenditure. Third, subsidized power tariff also caused slippages in current expenditure because of under provision in the budget for 2007-08. Fourth, mismanagement on account of export of wheat based on inaccurate estimates and subsequent import of wheat at much higher prices also contributed to the widening of budget deficit for the current financial year, he added. Dar further said that the government's reliance on heavy borrowing from the SBP caused excessive monetary expansion and has become one of the principal sources of inflationary build up in the country. He added that the inaction and political expediency of the previous government contributed to fiscal slippages beyond sustainable level. The new government, he said finds itself in an unenviable position to have inherited such a large slippage, which neither can be corrected immediately nor can be allowed to persist as it would undermine growth momentum and macroeconomic stability. As a result of higher oil prices Pakistan 's oil import bill reached to a targeted level of $ 7.9 billion for the whole year in just nine months (July-March) of the fiscal year. The oil bill is expected to reach $ 11.3 billion by the end of the fiscal year - almost 42 percent more than the targeted level. As a result of increase in oil import bill and excessive imports of luxury goods, Pakistan 's trade deficit has surged to $ 10.8 billion in the first nine months (July-March) and the year is likely to end at $ 13.8 billion - a deterioration of almost 46 percent over last year. The Current Account deficit has widened to $ 9.86 billion in the first nine months (July-March) of the current fiscal year against the whole year target of $ 7.95 billion. Minister for Finance, Revenues and Economic Affairs, Senator Muhammad Ishaq Dar while highlighting the priorities of the next year's budget said that Budget 2008-09 will be the budget of 'fiscal consolidation'. Given the current state of financial imbalances and the measures taken so far by the government, he said 'we believe that much more needs to be done to further consolidate the fiscal 'discipline'. Achieving fiscal balance is therefore central to a stable macroeconomic environment which is absolutely essential for private sector development, he remarked. The Finance Minister said that the Fiscal consolidation can be achieved through resource mobilization and expenditure rationalization. Pakistan 's tax-to-GDP ratio, he said is not only low but has declined. 'The only country, perhaps, worse than Pakistan in our region is Afghanistan', he observed. Pakistan, he said will have to allocate substantially large resources for strengthening the country's physical and human infrastructure to sustain the growth momentum. 'The challenge for us will be to significantly enhance Pakistan 's tax-to-GDP ratio in order to generate enough resources to finance development activities'. The government, he said will be making efforts to broaden the tax base i.e. to hitherto untaxed or under taxed sectors. Broadening of tax base will also ensure the fair distribution of the tax burden among various sectors of the economy, he remarked. The Minister said that the current situation in the country also demands that the burden on the poor is minimized. 'We are putting together a targeted package of measures to help the poor and vulnerable segments of the society' adding that in helping us achieve this objective as well as the objective of fiscal consolidation, he re-emphasize that heavy social and moral responsibility lies on the shoulders of the tax payers to pay their due shares irrespective of their sources of income. Dar also urged the business men and the rich to pay their taxes commensurate with their income to help us provide relief to the poor which is as much the responsibility of the rich in the country as it is that of the government. He further said that in addressing the issue of inflationary build up, both demand and supply side measures are already being undertaken. To contain aggregate demand the continuation of tight monetary policy stance will be appropriate. Augmenting supplies through domestic production and imports will put downward pressures on the price level, he remarked. Highlighting the government's medium-term agenda of economic reform and development said that it is the intention of our government to sustain the growth momentum in the range of 6 to 7 percent in the next 5 years. However, he said 'we believe that the growth of this magnitude will not be forthcoming automatically. To sustain a growth of this magnitude would require more efforts and more reforms. Reform is a dynamic concept. The economy must continue to adjust with changing domestic and international environment', he remarked. He added that Economic liberalization, deregulation and privatization in a transparent manner will be the core principal of our economic reform agenda. He said that the tow main coalition partners are the principal architect of economic reforms in Pakistan. He added that the opening up of the economy, making SBP and SECP autonomous, promotion of Foreign Direct Investment, Privatization and other tax and tariff reforms were carried out in the country during 1990s. He added that it is in this perspective that government will give more emphasis to agriculture and manufacturing but certainly services sector will continue to receive due attention. Tackling energy crisis to avoid stifling of growth by rapidly adding more power and at the same time conserving energy will be the priority of this government. 'We will ensure proper monetary and fiscal policies coordination to support growth and control inflation. Overhauling of tax policy and tax administration to ensure fairer distribution of tax burden to the society will also be the key policy objective of the government. Food prices will continue to be a major source of concern for policy-maker going forward'. The government, he said will launch a targeted social protection programme for the poor and deserving segments of the society. The government, he said is committed to restore macroeconomic stability in a reasonable time frame which will be vital for sustaining higher economic growth, job creation and poverty alleviation. The government, he further said is also very much concerned about the rising food prices and is taking various measures to ensure adequate supplies of these items in the market. He added that the government will take every measure to promote private sector development because we genuinely believe that the private sector is the real engine of growth and is the main source of employment generation. 'We also believe that private sector can produce, distribute and trade goods and services more efficiently. Therefore, there is all the more reason for promoting private sector so that they should take lead role in promoting growth and stability', he remarked.