ISLAMABAD: Ministry of Finance on Sunday said that International Monetary Fund (IMF) program is intact and a new mission is expected to be fielded in August to review full-year economic performance, besides the government is finalising an agreement with Saudi Arabia for supply of oil on concessional terms which would alleviate the need for further POL price adjustments.
A spokesperson of the of the Ministry of Finance contradicted the claims made by PML-N’s Miftah Ismail that IMF program has been suspended and not even a single IMF target has been achieved in two years.
“IMF program is intact, and a new mission is expected to be fielded in August to review full-year economic performance. The government is committed to reforms and has done significant progress since the program was launched and subsequently put on hold because of Covid19,” the spokesperson said.
In March 2021, he said that all missed Reviews were completed and Pakistan has rendered a stellar performance under the Fund program: i) Tax revenues are about to reach 4,700 billion compared to 3,862 billion left by PML-N’s government.
ii) Reserves have increased to $23.4 billion as compared to $16.4 billion left by PML-N’s government.
iii) Current Account deficit has been reduced from $20 billion to a surplus of around $1 billion in Jul-May 2021.
iv) The primary deficit was left at 3.8% of GDP which this government under the most painful economic conditions has succeeded to reduce to 1.1% this year and budgeted at 0.6%. After making adjustments of one-off expenditures for Covid19 and settling past IPP circular debt, this primary deficit is also budgeted to turn to positive 0.1%.
v) Interest rate which was 7.5% in July 2018, has been brought down to 7% after making necessary adjustments because of the failures of monetary policy under PML-N.
vi)The failure of monetary policy was starkly reflected in the fact that during Miftah’s Finance Ministership there was a complete breakdown in government debt market because all borrowings were squirrely sourced from the SBP.
Consequently, the SBP debt owed by the government rose from Rs 1,400 billion on 30th June 2016 to more than Rs 5,000 billion by July 2018, the spokesperson added.
“It is, therefore, useless to suggest that Pakistan has not done anything the IMF program.
It is curious to note that the Finance Minister of the PML-N government who is single-handedly responsible for pushing the country to seek a new program and destroyed Pakistan’s economy in just one-year by taking the current account deficit to $20b and depreciating the currency by 10% together with higher interest rates, is checking the progress under the Fund program from this Government and doubting government’s commitment to reforms,” the spokesperson maintained.
He further stated: “This audacity and shameless behaviour are the hallmarks of PML-N politics.
To Miftah’s claims that World Bank has stopped provision of loans, the spokesperson clarified as saying that ‘there is absolutely no truth in this assertion’. He added that only yesterday, World Bank has approved a loan of $442 million.
About the petroleum prices, the spokesperson stated the government is highly conscious of insulating the consumers from the vagaries of changes in international prices, particularly petroleum prices.
“In the last one year, against an increase of more than 100% in international petroleum prices, while the domestic prices have been increased by around 45%. This was done by sacrificing precious non-tax revenue just so that our people are not burdened,” he said, adding that next year, the government is committed to maintain price stability and hope that prices have peaked and would come down and the need for continued subsidy will no longer be required.
Furthermore, the possibility of lifting of sanctions on Iran would help reduce international oil prices, he said, adding that we are finalising the agreement with Saudi Arabia for supply of oil on concessional terms which would further alleviate the need for further price adjustments.
About Miftah’s claims that refunds of Rs 700 billion are outstanding which have not yet been paid to the people, the spokesperson clarified by saying that there is no truth in having such a large amount of refunds due for payment.
“More importantly, some of the refunds are relating the period when PML-N showed higher revenues by denying prompt payment of refunds. This government has ended up paying Rs 140 billions of refunds of that period during the last two years, which was not of its making. On the contrary this government is paying refunds promptly. This year alone it has paid Rs 233 billion in refunds which are 82% higher than last year,” he added.
The spokesperson further claimed that Miftah is misleading the nation by claiming that the government has endowed tax machinery with draconian powers of arrest and harassment.
“Mr. Miftah should read to the nation the following passage from the budget speech of the Finance Minister, which on many occasions he has welcomed publicly that we will restore the purity of self-assessment scheme, which would mean that except when there is any ‘definitive information’ contrary to the information disclosed in a tax return, all tax returns shall be deemed as assessment orders,” he said.
He said that the returns under self-assessment scheme would only be subjected to audit once they are chosen through an automated risk-based selection procedure;
“We would make use of outside auditors for carrying out the audit, which will be done remotely through an e-Audit system…These audits would be very serious and wilful evasion shall be considered a criminal offence carrying a jail term and we will strive to hit hard on harassment of taxpayers,” he further stated.
Accordingly, rather than harassing the taxpayers, the avowed purpose of bringing changes in income tax law is to save people from the clutches of the tax machinery and create simplicity and certainty in the tax system, he added.
He pointed out that the Finance Minister, when addressing the Senate’s finance committee has announced that the power of arrest would be circumscribed to be exercised not by an additional commissioner but a committee headed by himself.
About Miftah’s claims of surplus of Rs 570 billion from provinces is wrongly calculated by the government, the spokesperson said: “Miftah is again mistaken on setting the above target, adding that the level of surplus committed by the provinces is done by their voluntary commitment.
“More importantly, this money is not something given by the provinces to the Federal Government. It is something that is kept by the provinces in their own bank accounts to be used in subsequent years,” he further maintained.
Copyright Business Recorder, 2021