ISLAMABAD: Finance Minister Shauakt Tarin on Sunday said that the budget FY21-22 will be presented in mid June. Through this budget, he added the govt will seek to increase revenue without taxing the already taxed and burdening the electricity consumers.
The government would neither increase electricity tariff nor burden existing taxpayers and would increase Rs1 trillion revenue to reach close to the International Monetary Fund requirement of Rs5.9 trillion tax collection through alternative means and would reduce what he described as major headache of circular debt also through other means and not by increasing electricity tariff, he said at a virtual press briefing.
Finance Minister said he was appearing before the media because there are provisional results of 2020-21, showing GDP growing at 3.94 percent and this number should be taken in the background that when the present government came to power there was 20 billion dollars current account deficit and country did not have capacity to bridge this gap, which compelled the country into IMF programme. He said that IMF was harsh this time as compared to 2009 and done front loading and tariff, interest rates were increased and exchange rate was devalued and consequently economy was gone into tailspin and growth was declined but the stabilisation was necessary.
Subsequently, he said that there was Covid-19 but the prudent polices of the prime minister of not going to complete lockdown saved the economy and focused on some targeted sectors including housing, agriculture and especially export industry and as result along with stabilisation growth started to pick up.
He said that figure of 3.94 percent should not be made controversial because it was worked in a very transparent way by the Planning Division and Finance Division has nothing to do with it.
This number, he said gives confidence of 5 percent growth in next fiscal year and over 6 percent in the subsequent fiscal year.
Finance Minister said that revision of budget strategy paper, earlier got approved from the cabinet by his predecessor, has almost completed with alternative plans to revenue and power issue.
Finance minister also revealed that the International Monetary Fund (IMF) has been asking for Rs5.96 trillion tax collection for the next fiscal year, withdrawal of exemptions and taxing the salary bill, however, the government instead of burdening the people had decided to explore alternative means to reach closer to their requirement.
Shaukat Tarin said that his foremost priority would be to increase revenue as without increase in FBR revenue, the government continue to be indebted, fiscal deficit would be on higher side, and private sector would be deprived of credit. Sharing his plan he said that broadening of tax-base would be done through use of technology and innovative methods. He added that retail sector would be incentivized to bring it into the tax net so that their businesses could flourish and the forthcoming budget would be harassment free. The real estate sector would be given leniency in terms of self assessment to bring it in the formal sector. However, at the same time, he said the government would ensure third party audit and those who are not paying taxes would be given jail sentence if they got caught. The real estate sector would understand that they have to work under a framework, he expressed the hope. The Minister said, “In our opinion financial sector is very efficient and if it is so then why 42 percent money was out of banking sector”.
While highlighting strategy to achieve higher growth, finance minister said that the planning was almost completed in twelve sectors and will be submitted to the prime minister before the end of this month. The price stability would be first priority as Pakistan was no longer food surplus but a food deficit country. This happened as agriculture sector remained neglected for quite long time, he added.
He said that short, medium and long term plan has been prepared to bring about price stability. In the short term, he said that the government would take action against hoarders through administrative measures and food supply would be increased (through strategic reserves). In the medium to long term cold storages and commodity warehouses would be built and farmers would be encouraged to sell their products by themselves in the markets.
He said that the second priority would be growth, as it would have spillover impact on all other sectors, from increasing employment opportunities to revenue and per capita income.
He said that so far Pakistan has been following trickle down philosophy which was not sustainable and now this time the government would pursue the bottom up approach to protect the five, six million bottom households. He said that the prime minister will undertake a major initiative that would pursue bottom up besides trickle down approach and would even give interest free loans to the agriculture sector which would be a major revolution.
We have to increase exports more, as so far remittances have provided support to the country. He said that major reasons for increase in remittances are because overseas Pakistanis love Imran Khan besides FATF and Covid-19 factors.
The Minister said that money collected from across the country was being spent in nine cities which was not fair as KP savings should be spent in KP and Balochistan saving should be utilised in Balochistan. He said that housing mortgage has to be increased from 0.24 percent of the GDP because it would help increase employment and industrial growth.
After correcting all these things the government would be able to achieve 6 percent growth – inclusive and sustainable – and this would be possible only when fundamental fault-lines are corrected. This government for the first time, after later 1960s and early 70s was focusing on the planning.
About PTCL’s $800 million privatisation, he said that hopefully the matter would reach conclusion next year as discussion on the matter was in progress. He said increase in revenue is important to meet the debt servicing while on the FATF, he said that Pakistan has almost complied with all the conditions except one or two of transactional nature and he was expecting favourable response from June meeting.
He said that there are political elements in the FATF as India has been using it against Pakistan but Pakistan too had some friends’ support.
The finance minister said that he would try to get some leniency from the IMF in terms of amnesty scheme for Real Estate Sector which would be expiring in June 2021.
He said that the circular debt was a big issue of the government and government would try to resolve it through alternative means instead of increasing tariff and would stretch out capacity payment for three to four years which would increase to Rs1455 billion by 2023. He said that power plants were installed during load-shedding era on the assumption of increase in growth,
About subsidies, he said that in power sector 29 million consumers out of 35 million have been getting subsidy and now the government would provide targeted subsidy on electricity, flour and other essential commodities through Ehsaas programme.
The Minister dismissed a question that Dr Waqar Masood has held any meeting to manage the growth figure of 4 percent for the current fiscal year and stated that he [Tarin] was the one who had taken a technical assistance in 2009 for the independence of PBS and later on it was revamped but after he left the ministry, the PBS continued reporting to the Finance Ministry but the present government has placed it under the Planning Division.
He also acknowledged the need to review the National Finance Award with consensus as it did not serve the purpose to increase the tax to GDP ratio of 18 percent.
Copyright Business Recorder, 2021