ISLAMABAD, Nov 19: The government has approved a plan to reduce inflation to 9.5 per cent by 2010-11.

This was stated by Adviser to the Prime Minister on Finance Shaukat Tarin at a workshop on Wednesday on the draft poverty reduction strategy paper-II with development partners.

Representatives from the World Bank, Asian Development Bank, International Monetary Fund and other lenders attended the workshop.

“We are working for stabilisation of macro-economic indicators and all our initiatives are likely to be in place by the end of January,” he said.

He said the fiscal and current account deficits would be curtailed and internal resources would be mobilised.

The strategy paper has projected inflation for the current fiscal year at 22 per cent, for next year at 13 per cent and 9.5 per cent for 2010-11.

The GDP growth rate has been projected at 4.4 per cent in 2008-09, 5 per cent in 2009-10 and 5.5 per cent in 2010-11.

The policy document also says that the tax-to-GDP ratio will be raised from less than 10 per cent to 15 per cent by the end of 2012-13.

The targets will be achieved through elimination of exemptions, strengthening of federal tax administration and improved enforcement .

It could be followed by removing distortions in several taxes and exhorting provincial governments to fully exploit the potential of property tax.

Mr Tarin said the government was putting in place a 20-year development rolling plan with prefixed goals, which also contains six quarters rolling forecast in terms of best possible economic planning and development.

He said the government was prioritising all Public Sector Development Programme projects at federal, provincial and local levels.

He said the programme audit of all PSDP projects by internationally recognised agencies of the ongoing processes to streamline expenditure and rationalise the development projects would be put in place.

The adviser suggested that all development projects must have a pilot project to ensure success of subsequent full cycle projects. The problem of circular debt lock should be broken down through instituting special fiscal measures, he added.

Mr Tarin said agriculture was the key to economic prosperity and its development must incorporate a predefined income security mechanism for farmers that could lead to productivity enhancement and high-value crops focusing internal consumption and export needs/standards.

“There is an urgent need to develop an integrated energy generation and conservation plan in a manner that it could boost our agriculture, industry and other production sectors,” he said.