ISLAMABAD              -        Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh, on Saturday, hinted at bringing mini-budget in the months to come by saying that amendments could be made in certain areas if needed.

He said that the government could make amendments, as we should open minded. The government would monitor the budget throughout the next fiscal year and there would be a policy response when needed. Addressing a post budget press conference along with cabinet members and economic team, he said that government had reduced its expenditures and took tough decisions in the budget amid COVID-19 and the basic feature of the budget was no imposition of any new tax. The government enhanced the development budget by Rs100 billion for the next fiscal year.

Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh said that government would repay Rs2.9 trillion as interest payment on the loans taken by the previous governments in next fiscal year. Otherwise, the government would have spent this huge amount on poor segment of the society as the amount could increase Ehsaas Programme by 20 percent. He defended the government’s borrowing by saying that the new loans were not to increase expenditures of the civilian government but to repay the loans taken by the previous governments.

Hafeez Shaikh said that the government had not imposed any new tax in the budget in order to provide relief to the people who suffered due to impact of COVID-19. However, the government reduced taxes for reducing cost of doing business, he said.

Sharing a few highlights of the budget, he said that the regulatory duty on 1,623 tariff lines of raw materials used in textile, chemical, rubber and other industries were totally withdrawn. He said that the government had also abolished ten types of withholding taxes. He said that massive relief had been given to different sectors, especially the construction. He said that the Capital Gains Tax was also halved while the federal excise duty on cement was reduced by 25 paisa. He said that sales tax for the retailers opting to link themselves with the FBR was being reduced to 12 percent from 14 percent. He said that the duty on hospitality sector was reduced from 1.5 percent to 0.5 percent. He said that taxes and duties were being abolished on the testing kits of coronavirus and cancer.

The Adviser informed that government had given relief to various sectors for creating job opportunities’ in the country. He said that federal government could not give jobs to the people but it had facilitated the private sector to generate employment opportunities. On a question about increasing tax revenue by Rs1,000 billion without new taxes, the Adviser said that the government would try to enhance revenues through a strategy. he said that Tax collection would easily increase when economic activities would revive in the country after COVID-19. He said that the government had decided not to put additional taxation burden on the existing taxpayers of the country.

To a question about privatisation programme, he said that the Privatisation of two LNG power plants was at an advance stage, which halted due to coronavirus, however, the government had included 15 more public sector entities in active privatisation list, which would be pursued in the next fiscal year. He dispelled the misperception of any dictation from the IMF by saying IMF was an international body and provided loans to countries to help stabilize their economies. He said that it depended on countries to manage their expenditures according to their resources.

He clarified that petroleum development levy had not been increased in the country and neither the government had any intention of increasing it from existing thirty rupees per liter. The prices of petroleum had been reduced on the directions of the Prime Minister to provide maximum relief to the public.

Minister for Industries Hammad Azhar said that the private sector was the engine of job creation. He said that the government’s focus was on preservation of economy so that it ran smoothly and created employment opportunities. He said that the country haad improved its ranking in Ease of Doing Businesses and hoped that it would further improve in the next year. He said that an increase had been made in allocations for PSDP and a cash injection of fifty billion rupees had been made to SME sector to help it create new jobs. Hammad Azhar said we had also given a number of incentives to construction sector because it created employment.

Hafeez Shaikh once again claimed that country’s economic situation had improved before the coronavirus. However, Pakistan faced an economic loss of up to Rs3 trillion because of the COVID-19 pandemic in the current fiscal year, he said. The government had paid Rs5 trillion in term of loan and interest payment in last two years against the loans taken by previous governments. He said the government had controlled its expenditures, which resulted in surplus primary budget that he claimed never happened in the past. Adviser informed that government had neither taken loan from State Bank of Pakistan nor approved any supplementary grants during FY20.

He said that the government had successfully controlled the Current Account Deficit at $3 billion in FY20, which was around $20 billion when PTI took charge in 2018, showing reduction of 73 percent. He further informed that non-tax collection had increased to Rs1.6 trillion in current fiscal year from budgeted Rs1.1 trillion, which never happened in past. However, later, after the COVID-19, the economy suffered a loss.