ISLAMABAD - The government is going to take tough measures, increasing electricity tariff by double digits (percentage), levying new taxes, non-bank borrowing of Rs 100 billion and a similar cut in the development budget, to overcome the ongoing grave financial crisis. Federal Minister for Finance, Revenue and Statistics, Syed Naveed Qamar on Friday revealed to a select group of media persons that the government was increasing electricity rates in a couple of days to reduce pressure on already deficit budget. He said to discourage unnecessary imports, which were putting extra pressure on foreign exchange reserves, the government was increasing rate of taxes on all imported luxury items from fresh fruit to vehicles. "You will see an increase in prices of these items in a couple of days", said the Finance Minister. He said the government would offer new instruments in National Saving Schemes to get Rs 100 billion financing for budget as against earlier target of Rs 40 billion. The government would also borrow Rs 40-50 billion from various departments, which had deposited about Rs 700 billion in various banks at meagre interest rates, said the Minister. On Expenditure side, the government has decided to slash Public Sector Development Programme by at least Rs 100 billion. The actual size of the Programme is Rs 550 billion. It has also been decided to restrict supplementary grants, which have become a main source of more than targeted current expenditure. Five days a week working proposal will also be put in the next Cabinet meeting for its approval. The Minister said despite all odds the government would keep budget deficit at 4.7 per cent of the GDP during the ongoing financial year. He said the International Monetary Fund had proposed to set 4.3 per cent budget deficit target, which according to him was quite difficult to achieve. "The aim of all these measures is to bring macroeconomic stability before we go back to the same kind of economic growth of last seven years", said the Finance Minister. He said trade and budget deficits, deceleration of economic growth, and inflation turned out to be major challenges. "It's our failure that we could not take policy actions in time".  He said the most important problem was depleting foreign exchange reserves. The Minister said the government had decided to change the philosophy of financing of budget deficit. "We will not borrow from State Bank of Pakistan. We are moving towards non-bank borrowing". He said the government decision to accumulate Rs 100 billion by issuing new instruments would provide it a space not to borrow from the Central Bank.    The Finance Minister categorically stated that the government would eliminate all subsidies on petroleum products and electricity by the end of the year. He said the electricity charges remained unchanged since March 2008 when oil prices were increased many times. "The thermal power generation has become too costly". The Minister did not give the exact figure of increase but said, "There is a need of fairly hefty increase in electricity prices". The official sources said National Electric Power Regulatory Authority (NEPRA) had recommended 61 per cent increase in the electricity charges. Due to nonpayment to Independent Power Producers, they were threatening to call sovereign guarantees, thus the government had to take tough decisions to avoid such a situation, said the Minister and added, "We will press PEPCO and WAPDA to also work on line losses". Syed Naveed Qamar said the government would launch commercial papers to mop up the departments' own deposits. He said the government gave money to the departments for various purposes but they fixed it in saving schemes to earn profit. Mr Naveed said the government would gradually take back all this money. He said in future the government departments could only draw the money, which is essentially required. In next Cabinet meeting the Finance Ministry will table a summary seeking permission to levy regulatory duty on export of high-speed diesel to Afghanistan equivalent to subsidy the government was providing on the diesel to its citizens. So far, subsidized oil is exported to Afghanistan, which caused billions of rupees loss to the national exchequer, said the Minister.      The following challenges are compelling the government to take drastic measures. The economic growth rate has come down to 5.8 per cent, inflation is breaking 30 years old records, sticking around 25 per cent, current account deficit has reached to over US $ 14 billion during the last financial year, the gap between government income and expenditure widened to 7.3 per cent of GDP. The difference between exports and imports also jumped over US $ 20 billion in one year, the ever highest. Pak rupee is fast losing its value against the American currency and has shed its value by more than one-fifth during the last five months. The US dollar reserves have come down to $ 9.92 billion from $ 16.3 billion. The reserves with the Central Bank, US $ 6.6 billion, are enough to support about two months' imports on current pace. On external front the government was also taking some measures. Syed Naveed Qamar said International Monetary Fund had given a letter of comfort for obtaining US $ 500 million loan each from World Bank and the Asian Development Bank. The IMF issues a letter of comfort on the basis of the health of economy. "It is a good sign that the IMF has endorsed our economic policies, which would give a positive signal to the market," he added. The Minister said that other than Rs 52 billion inflows of privatization, which were in pipeline, he would announce more big-ticket items to be privatized on coming Tuesday. He said the privatization process would be re-launched with a new spirit. He said this year US $ 266 million instalment of PTCL would also come in. Syed Naveed Qamar said the government would also float US $ 750-800 million workers' remittances securitization bonds. To reduce pressure on foreign exchange reserves, the government had offers from the United States and Canada to import wheat on deferred payments.