Pakistan initiates talks on reprofiling Chinese power sector debt in country

Pakistan has initiated talks on reprofiling its power sector debt to China, alongside talks on structural reforms suggested by the International Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb told a press conference on Sunday.

He said that Pakistan will address the reprofiling of Chinese credit to the power sector on a project-by-project basis and that Islamabad is looking to appoint a local advisor in China for the purpose.

The finance minister stressed that it is reprofiling and not restructuring of debt because there is no question of cutting the amount it owes. Reprofiling is generally understood to involve an agreed lengthening of the time needed to repay.

The countries, which share a border, have been longtime allies, and rollovers or disbursements on loans from China have helped Pakistan meet its external financing needs in the past.

Pakistan is in talks with Saudi Arabia, the United Arab Emirates, and China to meet gross financing needs under the IMF programme for which Islamabad needs board-level approval.

The IMF this month agreed on a $7 billion bailout for the heavily indebted South Asian economy while raising concerns over high rates of power theft and distribution losses that result in debt accumulating across the production chain.

During the presser today, the finance czar further said that the government was taking decisions to improve the country’s economy, adding that reforms are being done in the Federal Board of Revenue (FBR) to increase collection, reported Radio Pakistan.

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He said weekly meetings are being held under the chair of Prime Minister Shehbaz Sharif. He said the government’s top priority is putting less burden on the lower-income class.

Expressing gratitude to the Chief Ministers of all four provinces for supporting the government’s tax reforms agenda, he expressed hope that they will introduce tax legislation for the inclusion of the Agricultural sector in the taxation regime.

He said without including the untaxed and under-taxed community in the tax regime, we cannot achieve certainty and ease of collection which is vital for economic stability.

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Regarding facilitation to the business community, Aurangzeb said claims worth Rs68 billion have so far been now refunded.

The minister said notices will be sent through a centralized system, while field formations will be authorized to collect taxes accordingly.

Mentioning the details of tax evasion and fraud, he said the government has identified a tax potential worth Rs600 billion that was not collected, out of which Rs1 billion has been recovered so far.

In customs, through misclassification, tax worth around Rs50 to 200 billion has been identified.

He urged the media to start a campaign against the under-tax and un-taxed community.

The minister said the government is also working on the simplification of the tax processes to facilitate business and salaried persons.

Through this simplified process, they will be able to respond to our system in a very simple and easy manner without the involvement of any tax consultant.

Stressing the importance of rightsizing, the Minister said five ministries, including Kashmir and Gilgit Baltistan, SAFRON, Industries and Production, IT and Telecom, and Health have been short-listed in this regard.

He said Prime Minister Shehbaz Sharif will take the final decision to this effect, he said.