ISLAMABAD - Finance Minister Shaukat Tarin on Wednesday said that Pakistan is not seeking an exit from the International Monetary Fund (IMF) programme but it is looking for some space to avoid harsh decisions.
He said that IMF has some tough conditions which will also have a political cost. He further said that Pakistan does not have a capacity to increase the power tariffs and taxes under the IMF programme. “At this time, we don’t have the capacity to increase tariffs or incremental taxes, our common man is completely fed up with this inflation,” Finance Minister said in his first press conference along with Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood.
He further said that increasing electricity prices and taxes would further enhance the inflation rate. He said that Pakistan has conveyed it to the World Bank and the IMF and they had been very sympathetic to it.
The Finance Minister informed that the government would follow the alternative plan to increase the tax collection and reduce the circular debt of the power sector. In power sector, he said, the government would reduce the line losses and increase the collection to control the circular debt. “Tariff increase is not the only way to raise money. He added that Prime Minister Imran Khan was against it.
‘We will apologise to them and they are sympathetic to us’
“We will apologise to them on this and they are sympathetic to us.”
Talking about taxation, he said its ambit would be further increased through “innovative methods” and the tax-to-GDP ratio would increase every year by one to two percent. Tarin added that sudden increases on the orders of the IMF, as had been done in 2019 when tax collection target was enhanced from Rs3800 billion to Rs5550 billion, would “not happen. This is the wrong way of doing it”. Instead gradual annual increases would be the better way to go and efforts would be made to convince the IMF about it, he added. He said that the environment was not the same as in 2008. “Back then, the world was supporting us because of the Fight Against Terrorism. But now some countries made it more difficult for us because of which we faced many restrictions.”
He said that the government is pursuing a policy to take the economy towards growth mode. The goal will be achieved by incentivizing the industries, agriculture and housing sectors. This will provide job opportunities to the people. Unveiling the way forward, he said twelve working groups have been constituted in the Economic Advisory Council to frame short, medium and long term policies for different sectors. He said that price stability is our key focus and it is the aim of the government to check the inflation to provide relief to the common man.
Shaukat Tarin appreciated the efforts of Federal Board of Revenue (FBR) in tax collection. He said that tax collection was showing growth of 92 percent till April 2020. However, later, due to the third wave of COVID-19 the collection recorded growth of 57 percent by the end of April.
However, he said that people faced harassment from the FBR due to which they didn’t enter the tax net. “We will bring programmes in this [upcoming] budget which will reduce and eliminate obstacles so the common man who wants to enter the tax net does not face difficulty.”
Finance Minister has termed the energy and power sector as a “very big gorilla”.
He said the capacity payments were increasing a lot. “This is a very big area we will have to look at”. He said that Pakistan’s performance in agriculture in the past decade and said it was “flat” and not enough money had been spent on it, “We will have to spend money on agriculture [...] we will have to treat agriculture as a major industry for us because we have the most employment there.”
Shaukat Tarin said they also want to bring Foreign Direct Investment in the export oriented industries in order to bolster our exports. China-Pakistan Economic Corridor (CPEC), he said, would have to be used and the Chinese would be requested to set up special economic zones and bring their outsourced ventures to Pakistan.
He said there is a great potential of growth in the IT. Its exports will remain two billion dollars this year and these can be enhanced to eight billion dollars in the next two to three years. “IT can be a game changer for us in the next five to 10 years.”
He said that the government would start Kamyab Kisan (farmer) Programme, similar to the Kamyab Jawan Programme. He said these programmes would bring prosperity for lower segments because of which poverty levels will decrease.
To a question about the National Accountability Bureau (NAB), the finance minister said that “we should stop digging and see where we stand. NAB should look at many things, they don’t know what is happening and they should understand our environment.” He added, however, that he wasn’t giving a public statement but relaying his own experience. He declined to comment more on the matter and said the prime minister and others were involved in it and there would be steps taken soon on it.
“It is important that we bring political stability here. It will be my effort to decrease the temperature and I will sit with these people whether it is PML-N or PPP or other political parties so we can create consensus on certain economic issues.”
He also stressed that improvements were needed in the bureaucracy and that “we have to make the government the employer of choice”.
He said that middleman is making a profit of about 50% to 60%. This is far too much. “Price stability is our key focus and we want to bring relief to the common man,” he said and added that he has directed to maintain reserve of the basic food commodities to tackle with middlemen.