Government working towards ensuring 40 percent cut in provincial ADPs: Pasha

The government has committed to the International Monetary Fund (IMF) to ensure a cut of 40 percent in the Rs 817 billion consolidated budgeted provincial annual development plans (ADPs) for the current fiscal year restricting it to Rs500 billion.
Speaking as a guest in 'Paisa Bolta Hai' with Anjum Ibrahim, former advisor to prime minister on finance Dr Hafeez Pasha said that the decision to reduce provincial ADPs was unliterary taken by the federal government which is why the Council of Common Interest meeting is long over-due.
He said that like previous mandated quarterly reviews under the ongoing $6.64 billion extended Fund Facility, Pakistan was given very sympathetic and soft treatment by the IMF in the ninth review as well largely because there was realisation in the international community that Pakistan was fighting against terrorism and needs support.
Pasha added that Pakistan, till the completion of 9th review, was given 14 waivers, which is unprecedented and is expected to get two or more waivers after the completion of the ongoing tenth review.
About tax amnesty scheme titled voluntary tax compliance scheme Dr Pasha said that the scheme has been approved by the parliament and it would be very wrong on the part of Fund to interfere in the affairs of parliament.
Pasha said that there is strong resistance on strategic partnership of Pakistan International Airlines (PIA) from employees who are on strike. He suggested that the government needs to manage the matter very carefully and suggested without its privatisation, national flag carriers can turn in profit making organisation. He suggested that this can be achieved by corporate restructuring and improvement in its performance because there is a lot of space available to turn around the entity especially when oil prices have declined significantly. Pasha said that he was unable to understand the urgency in the government corridors on the issue of PIA privatisation. As the government claims that Pakistan's foreign exchange reserves stood at $21 billion, there is no need to relay on expensive borrowing and selling family silvers to mobilise revenue and focus must be on promotion of exports for sustainable resources.
In the GSP plus context, in the first 18 months there was 20 per cent growth (over one billion dollar) in exports but from July 2015 onward to December 2015, exports started falling in every European member country except Germany with overall decline of 8 per cent. One of the major reasons for the decline is that Euro is declining but "we are linked to the dollar", he said adding as a result Pakistan currency with respect to Euro appreciated by 20 per cent and consequently impacted exports. He said that even the country like Turkey has depreciated its currency.
He said the government was managing exchange rate to collect more revenue by raising import duty. Pasha said it was surprising that when the import in terms of value have declined by 5 per cent, collection of duty on imports increased by 32 per cent. The government was increasing duty on all imports including petroleum products. Hafeez Pasha said that cut in development spending would compromise the growth target and it may remain around 3 per cent in the current fiscal year. He added that additional import of 4 million cotton bales which would cost around $700-800 million as well as non materialisation of CSF and falling exports would put pressure on current account deficit. As a result, he said that the current account deficit would be wider than projected for the current fiscal year. Pasha said that there is expectation that IMF staff level mission would take up the issue of exchange rate during discussion on 10th review.