ISLAMABAD - Finance Minister Senator Ishaq Dar on Monday made a revelation that 60 percent of the overall population of Pakistan lives below poverty line and vowed to increase the tax to GDP ratio to 15 percent in five year from existing 8.5 percent.
Finance Minister Senator Ishaq Dar has said that 60 percent of the overall population in Pakistan lives below poverty line, as their income is not $2.5 per day. Talking in launching of IPP’s Sixth Annual Report titled “The State of the Economy: From Survival to Revival”, the Finance Minister said that Pakistan was left with hardly a choice than to approach IMF to beef up dwindling foreign exchange reserves as well as to fulfil national obligations. “Pakistan has received $544 of IMF on 6th September that will increase country’s reserves to over $10 billion”, he informed.
Dispelling the impression of rupee depreciation against US dollar under IMF deal to the extent of Rs 114, Senator Ishaq Dar said that issue of adjustment of rupee-dollar parity was not even discussed in talks with the Fund. Talking about IMF progamme, Finance Minister said Pakistan has taken loan programme of $6.64 billion from on the basis of home grown reform agenda and did not compromise on national interest.
Following the IMF deal, he said, other international financial institutions (IFIs) and donors’ agencies are approaching Pakistan for doing business, which had halted for the last 3 years. The Islamic Development Bank has already agreed to a loan of 750 million Euros and a trade facility of $150 million. In addition to this, the World Bank and Asian Development Bank have agreed to recommence their support to Pakistan after a lapse of three years. “Standard & Poor’s and Moody’s have given a positive outlook on Pakistan after a long time and the Overseas International Chambers of Commerce, which conducts regular surveys on business confidence, has raised its index for Pakistan from a negative of 34 to a positive of 2”, Senator Dar added.
The Finance Minister said that government would increase tax to GDP ratio to 15 percent in next five years from existing 8.5 percent by bringing non-taxpayers into the tax net.  “The government is issuing notices to non-taxpayers, as around 10,000 notices issued every month, he maintained.
In the case of State Owned Enterprises, the Finance Minister said professional managers are being appointed in all public sector corporations through a competitive and transparent process of recruitment. An independent Federal Commission has been constituted to ensure transparent selection of heads of autonomous bodies. Strategic partnerships with management control shall be our policy of choice. Alongside this, full financial restructuring will be carried out to enable State Owned Enterprises to run on sound commercial basis, he added.
Regrettably, Senator Ishaq Dar said the average annual growth rate over the past five years has been a dismal low of just about three percent, when our neighbours were growing at rates of over seven percent and investment to GDP has fallen from 19.3 percent in the recent past to a record low of 12.6 percent in FY 2012-13. Similarly, public debt, which stood at Rs. 3 trillion in June 1999 had expanded to over Rs.14 trillion in June 2013. Even after the payment of a Tariff Differential Subsidy of Rs.1.5 trillion during these years, we found a legacy of unpaid subsidy of Rs 503 billion, commonly known as Circular Debt. The revised federal fiscal deficit for FY 2012-13 was projected at 8.8 percent and with some expenditure cuts and other measures closed at an unacceptable level of 8.2 percent of the GDP, while the current account deficit was $2.3 billion. The FBR Tax to GDP ratio for the same year was an embarrassing 8.5 percent of the GDP as the tax collections ended at Rs. 1,936 billion against an original budgeted target of Rs. 2,381 billion.
Talking about Medium Term Budgetary Framework for 2013-16, the Finance Minister said GDP growth would gradually rise to around 7pc, Investment/GDP to rise to 20pc, Fiscal deficit to be brought down to 4pc of GDP, Pakistan’s foreign exchange reserves be increased to around $20 billion, and Public Debt be reduced to 57.5 percent of the GDP.
He said that government has introduced reforms in power sector, as it cleared the circular debt of Rs 480 billion, while the remaining Rs.23 billion is subjected to pending litigation on account of liquidated damages. As a result of this, 1700 MW of power have been added to the system. Similarly, he added that government has reactivated Nandipur Power Project which will add 425 MW to the national grid, financial close on two civil nuclear two power generation projects in Karachi, with a capacity of 2117 MW, accelerated work on Neelum-Jhelum Hydro Project with 969 MW generation capacity, work on Dasu Hydropower Project and Diamir-Bhasha Dam have been initiated simultaneously, an energy park planned at Gaddani Hub with planning of 10 coal-fired energy projects with generation capacity of 6,600 MW.
In addition, cabinet approval has been accorded for triggering negotiations on the Central Asia South Asia (CASA)-1000, which, once completed, will provide 1000 MW electricity to Pakistan’s national grid.