KARACHI: The Government of Pakistan Muslim League- Nawaz (PML-N) is business friendly and seeks cooperation to steer the country out of its present economic problems.
This was stated by Federal Finance Minister Senator Ishaq Dar, who met representatives of Karachi Stock Exchange (KSE) and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in his maiden meeting with business leaders here on Saturday.
The Minister pointed out that the PML(N) Government is business friendly and seeks their cooperation to steer the country out of its present economic problems and put it on the road to growth and prosperity as it has a clear road map.
He has directed constitution of a committee comprising representatives of Ministry of Finance, Karachi Stock Exchange, Securities and Exchange Commission of Pakistan (SECP) and State Bank of Pakistan, to submit a report to the government for trading of T-Bills and government bonds in Stock Exchanges in Pakistan.
The Committee has been directed to submit a report by August 31, 2013, with the direction that its report is implemented by September 30, 2013.
The Finance Minister has also constituted a committee to look in to the utilisation of Capital Markets for raising finances for infrastructure projects in the country.
The committee comprising representatives of SBP, SECP and KSE shall submit its report by September 30, 2013.
Addressing the representatives of KSE, the Finance Minister during a meeting with business leaders in Karachi after a gap of 15 years, said that he had come with his economic team which shows the seriousness the government attaches to Karachi and its business leaders.
He said that the economic initiatives taken by his government are in line with the manifesto of PML(N) and that transparency and abidance of rules and regulations are the guiding principles of policy of the government.
The Finance Minister said that he wished to visit Karachi earlier but preoccupation with preparation of budget, negotiations with International Monetary Fund (IMF), clearing the circular debt and other unavoidable business did not provide him an opportunity to meet business leaders in Karachi earlier.
He said that this government had inherited a broken economy which can be gauged from the fact that fiscal deficit had reached 8.8 percent, growth stagnated at 3.6 percent, there was revenue shortfall of Rs 440 billion and a public debt of Rs 14,500 billion which was Rs 3000 billion in 1999.
The entire Public Sector Development Programme (PSDP) was being financed by loans, he added.
Senator Ishaq Dar said that it was in the backdrop of this dire economic situation that the government had to take painful decisions so that a direction could be given to the economy.
He said that section 165A providing access to banks would be only used by Chairman and Member Federal Board of Revenue (FBR) and would only be meant for new assesses. In this connection he also clarified that the government has set a target of increasing the tax assesses by 500,000.
The FBR, he said, had already issued notices to 10,935 new assesses. These assesses have only been asked to file returns this year.
The Finance Minister said that to check the abuse or misuse of this power the existing fine for its misuse has been increased by 10 times to Rs 500000/- and imprisonment has been doubled.
He said that the power was necessary to identify new tax payers who travel internationally or pay high fees for the children.
The Finance Minister said that he had always disputed the figures of the previous government about the numbers of people living below poverty line in Pakistan.
The international surveys have now proven him correct and there were over 100 million people living below the poverty line in the country as compared to 30 million quoted by the previous government.
Clarifying the imposition of 0.5 percent income levy, the Finance Minister said that this is being levied to help the poor of the poorest in our society.
He assured the businessmen that for the purposes of the computation of levy their wealth tax returns will be accepted on face value and that this levy would not be imposed on registered firms. It is the national and religious obligations of the affluent and well to do to help their poor countrymen.
A separate account will be maintained where the levy will be deposited and the balance amount will be paid by the Federal government.
He urged the business people to show generosity and come forward to help their poor country fellows, he added. The government he said intends to provide cash grant for four million families, this year.
Dispelling the speculations that a tariff adjustment of rupees six has been made in the rates of electricity by the federal government, the Finance Minister said that the correct position is that there has been no increase in the tariff rates of domestic consumers upto 200 units. The new rates that have been revised relate to increase in the tariff of industrial, bulk and commercial consumers which were determined during the previous government as well as the Caretaker set up. The speculations that increase in their tariffs by Rs six are also not true. The government has not passed over the entire tariff differential to the consumers and would still be providing power subsidy of Rs 250 billion on this account.
The Finance Minister said that power tariff had not been increased since May 2012 by previous government including the Care-taker set up due to political expediency.
We have cleared circular debt of Rs 480 billion and retained 23 billion pending decisions over the liquidated damages claimed by the Government of Pakistan against IPPs, he added.
The government of Pakistan was obligated to pay IPPs and had given sovereign guarantee to them. Most of them had even approached the courts, he added. This has not only added 1700 mw electricity to the national grid but also provided confidence to investors.
Senator Ishaq Dar said that Pakistan is a member of IMF and like other members eligible for obtaining assistance from it.
The IMF team was on a routine visit to Pakistan in compliance of article 4. He held successful negotiations with them and the government entered into a programme with IMF to borrow money to meet Pakistan's national obligations.
The current loan would not add to the national debts stock and would be utilised to repay loans taken by the previous governments. There can be a debate within the country about the utilisation of earlier loans taken by previous governments but we have to fulfill our national obligations. Taking loans and making capital investments is fair but using them for meeting current expenditure is unjust.
The Finance Minister expressed his confidence that IMF board will approve the programme with Pakistan in its September 4 meeting which will not only improve Pakistan's ratings but also give comfort to international financial institutions and banks.
He said that in the near future the government will take measures to improve and build the existing foreign exchange reserves.
The Finance Minister said that the measures taken by the government including tariff rationalisation and imposition of new taxes as well as reforms in the taxation system would have been taken even if there was no IMF programme.
The Finance Minister said that as a result of the policies and measures adopted by the present government, multilateral donors who were earlier hesitant to deal with Pakistan were now approaching the government and ready to offer financial support to its projects and programmes in line with the priorities set by the government.
In this connection he revealed that the Islamic Development Bank (IDB) with which he held negotiations during his Umrah has agreed to provide Euros 750 million and a trade facility of dollars 150 million.
The SBP, he said, has received its first tranche yesterday.
Talking about the depreciation in rupee, the Finance Minister said that this was a result of purchase of dollars for import of gold as India had imposed duties on its import.
Speculators in Pakistan imported gold. The government has therefore, imposed a ban on import of gold and is reviewing the entire import regime of gold.
The Finance Minister disclosed that the government is reviewing the entire scheme of import of gold and will come up with a comprehensive plan so that it is not abused and facilitates genuine jewellery exporters.
The Finance Minister said that apart from austerity measures including cut in non-salary expenditure of 30% , abolition of discretionary fund of Prime Minister and Ministers, abolishing of secret funds account except for two national security institutions reflects the seriousness and the intentions of the government to bring financial discipline in the economy.
The Finance Minister urged the Board of Directors of Karachi Stock Exchange to check speculations and protect the interests of small investors.
The Finance Minister said that the people of Pakistan and businessmen particularly should understand the current economic situation inherited by this government and cooperate with it. He said given the sincerity of purpose and the hard work of the government, he was very optimistic that a bright economic future awaits Pakistan and the living standard of the people of Pakistan would improve.
The members of FPCCI raised various issues with the Finance Minister regarding procedural issues pertaining to sales tax and income tax.
The Finance Minister constituted a Committee comprising members of the FPCCI and FBR to look into the procedural problems and anomalies in the tax structure and directed it to submit a report within 10 days.
The businessmen appreciated the initiatives taken by the government and assured the Finance Minister of their support and cooperation.
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