ISLAMABAD, Feb 6: Amid change of finance minister’s designation to adviser on finance following a Supreme Court judgement, the government has started preparations for National Budget 2012-13.

A senior government official told Dawn on Monday that first meeting of the stakeholders had been convened on February 7, 2012 to finalise “budget strategy paper (BSP) for financial year 2012-13”.

It will be the first official meeting to be presided over by Dr Abdul Hafeez Shaikh as adviser to the prime minister on finance and revenue.

The BSP envisaging rolling medium term fiscal framework for three years, broad fiscal targets for the next year and resource envelope to be available for the coming year is required to be approved by the President of Pakistan to trigger formal budget making process, he said.

After presidential approval, the BSP will be required to be shared with the provincial governments, federal ministries and other institutions of the state for firming up next year budgetary projections before its presentation to the parliament. Based on recommendations of the provincial governments, federal ministries and members of the parliamentary committees, the finance ministry is expected to roll out BSP-II that would be presented to the federal cabinet for approval and formal presentation in the parliament in May.

The BSP would cover macroeconomic situation, key revenue and expenditure policies of the government, medium term fiscal and macroeconomic framework and indicative budget ceilings for all federal ministries. The indicative budget ceilings would be communicated to the principal accounting officers of the federal government to recommend their expenditure targets within the indicated limits.

For the first time, the government would align output based budgeting with the new framework for growth finalised by the Planning Commission and cleared by the National Economic Council last year.

Officials said the tentative economic growth rate target for next year would be fixed at around 4.5 per cent from this year’s target of 4.2 per cent which was likely to be missed marginally by 0.3 per cent owing to floods while target for inflation at 9.5 per cent already estimated under the medium term budgetary framework would remain unchanged.

Other major targets indicated as part of the 2011-14 are likely to be drastically changed owing mainly to substantial slippages during the current year.

Officials said the total revenue and Federal Board of Revenue targets as percentage of GDP set for the current financial year seem to be unachievable and hence the next year targets would automatically realigned with ground realities.

For example, the revenue target for the current year was set at 9.3 per cent of GDP was unlikely to be met. Therefore, the tax to GDP ratio at 9.6 per cent for next year would be significantly brought down.

Likewise, the fiscal target for current target set at 4 per cent of GDP for the current year was now estimated to be missed by a wide margin.

The government has already revised deficit target for the current year to 4.7 per cent but it would be difficult for the government to contain deficit below 7 per cent.

Therefore, the next year deficit is likely to be set at around 5 per cent of GDP.

Officials said that in view of aggregate resource constraints, the finance ministry would strive to recommend conservative revenue estimates, based on existing fiscal and taxation policy with no tax policy changes and existing administrative arrangements in place but the government would like to offer a populist approach to the next year budget.