Pakistan News And Discussion-11

[Naresh]

[center]<b><span style='font-size:21pt;line-height:100%'>At year’s end</span></b>[/center]

THE Finance Ministry seems to be toeing the water before it announces the next fiscal year’s budget. It is conducting a tour of meet-the-presses called “Budget 2007-08 – A milestone in the continuation of economic reforms”, the third leg of which was held in Lahore yesterday.

Advisor to the Prime Minister on Finance, Dr. Salman Shah was the keynote speaker. <!--emo&tupid--><img src='style_emoticons/<#EMO_DIR#>/pakee.gif' border='0' style='vertical-align:middle' alt='pakee.gif' /><!--endemo-->

Dr. Shah talked about a lot of issues, ranging from the fiscal deficit (“We’ll maintain it at 4 percent of GDP”) to education and human resource development (“We’ll raise it to 4 percent of GDP”). He talked of investor confidence and the voracity with which government bonds are gobbled up in the international capital markets. The real question on everybody’s minds, however, was inflation. And that was what a majority of the questions were about. Specifically food inflation, which has seen a particularly bad year. There are two trends in food prices, Dr. Shah told the audience. First, food prices are increasing the world over. Second, the support price that the government sets for certain food items contributes to keeping the prices up. <!--emo&:liar liar--><img src='style_emoticons/<#EMO_DIR#>/liar.gif' border='0' style='vertical-align:middle' alt='liar.gif' /><!--endemo-->

Who should we protect? The farmer or the consumer? Dr. Shah is right when he points out that it is a fine balance. However, support prices have been around since a very long time.

The rampant, near double-digit food inflation that we have been seeing cannot be explained away by support prices. Food inflation is basically a result of the government’s mismanagement of the agricultural goods market. <!--emo&:rocker--><img src='style_emoticons/<#EMO_DIR#>/rocker.gif' border='0' style='vertical-align:middle' alt='rocker.gif' /><!--endemo-->

<b>Dr. Shah admitted the fact that the inflation target of 6.5 percent could not be met. The other targets that the government could not meet this year, the one’s that did not come up for discussion at the seminar: industrial production, down 6.8 percent from 11 pc target; Large scale manufacturing down to 8.8 pc from a target of 13 pc. Exports have fallen short of the target by about 13 pc. Happy new fiscal year.</b> <!--emo&:flush--><img src='style_emoticons/<#EMO_DIR#>/Flush.gif' border='0' style='vertical-align:middle' alt='Flush.gif' /><!--endemo-->

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->