ISLAMABAD: Expecting a disbursement of $981 million by the US by June this year under the coalition support fund and Kerry-Lugar-Berman Act, Finance Minister Dr Abdul Hafeez Shaikh on Tuesday identified five major challenges of the next year’s budget.

He said at a news conference, the recent visit of the economic team to the US as part of spring meetings of the World Bank and the IMF had gone well and economic stabilisation measures taken in hand by the government were appreciated.

He said the government had been able to put across Pakistan’s case for growth strategy, expenditure management and emerging positive signs on the external account.

He said the IMF had agreed to ‘explore ways to facilitate’ disbursements of $500 million each by the Asian Development Bank and World Bank and carry out a fifth review of Pakistan’s macroeconomic situation under the existing loan programme.

He said that about $381 million were expected to be released by the US under the Kerry-Lugar-Berman Act before June 30 besides disbursement of $500-600 million under the coalition support fund before the next budget.

He said the top-most challenge for next year’s budget was how to maintain economic stability.

“This is the key to protect recovery,” he said. The second challenge was how to ensure that the country was moveing into a high growth trajectory and create a balance between growth and revenue expansion.

Third, how to pass on benefits of economic recovery to people at large through inclusive growth and fourthly how to ensure protection to weak segments of society in this transition of economic recovery.

On top of all these challenges, he said, the focus of the government would remain on bringing energy situation under control because it was important for growth. He said the government could no longer spend big amounts on subsidies and hence would need to provide targeted subsidies through cash transfers.

Responding to a question about taxing farm incomes, the minister said that the people should respect the Constitution which empowered provinces to have a control over agriculture.

“We have to move very carefully and therefore we plan to take up the issue before the Council of Common Interests (on farm tax),” he said.

He parried questions when asked how long the government could survive without IMF assistance, but said what needed to be understood was that economic revival plan and revenue mobilisation programme were in the best interest of the country.

He said the government was also trying to tap into the capital market and the proposed sale of exchangeable bonds was a move in that direction.

In reply to a question on the introduction of RGST, finance secretary Dr Waqar Masood Khan who was assisting the minister said that the RGST was very much on the agenda but its implementation remained dependant on parliament. At the same time, the government was pursuing an alternate plan and RGST would be part of the next year budget.

He did not agree with a notion that the economic team had returned from the US empty-handed, asserting that the government neither demanded a new IMF programme, nor a letter of comfort for budgetary support by other institutions.