Lahore - A large number of Wapda and Lesco employees continued their protest outside LESCO Headquarters against the proposed privatisation of electricity distribution companies. On the other hand the government has made commitment to the IMF of privatization of Lesco as well as some other DISCOs next year.

The protesters, who have been demonstrating for the last three days, say they will not accept privatisation of the public utility company at any cost.

Though the talks between Privatization Commission officials and workers are underway yet no positive result is expected as the government had promised to the IMF for the sale of Lesco in 2015-16.

The general secretary of All Pakistan WAPDA Hydro Electric Workers Union Khurshid Ahmed claimed that protests are being held by the workers all over the country including Pishawar, Quetta, Islamabad, Pindi, Multan, Sukkar, Hederabad and several other cities against privatization. The protesters adopted a resolution against privatization, urging the government to introduce administrative reforms in all public enterprises including Railways, OGDC, PIA, PSM, instead of selling them.

Meanwile, the government and the International Monetary Fund have agreed on a plan to end the power circular debt through tariff hike and privatization of DISCOs. Under the plan, the privatisation of three distribution companies including Islamabad, Lahore and Faisalabad, would be completed during the next fiscal year. The crux of the arrangement was that relatively higher system losses would be built in the multi-year tariff to stop increase in debt and make it attractive for private sector so that debt stock could be cleared through privatisation.

Reports said that the IMF had recognised that taxation remained a significant issue in Pakistan even though tax-to-GDP ratio had been increasing for the last two years, but there was no quick fix solution to further increase it without reforms. Pakistan’s tax-to-GDP ratio had increased from 9.9 per cent in 2012-13 to 11.2 per cent for this year based on latest evidence but the country was still on the very low end when compared with countries which have 15-20 per cent tax-to-GDP ratio. Pakistan needs to improve its tax base expansion significantly to ensure priority spendings for infrastructure development and social sector protection. It was not important for the government to issue 100,000 tax notices but it was important that these were issued to the right people and bring more tax revenue and hence it was important to go for risk based audit.

The government and IMF had also agreed on the contours of the next year budget involving up to 4.3 per cent fiscal deficit limit. IMF had lowered Pakistan’s expected growth rate for this fiscal year from 4.3pc to 4.1pc because of lower private sector credit and lower than anticipated growth in Large-Scale Manufacturing (LSM) even though construction and financial services sectors were doing well. Around 40 per cent of total federal spending this year went to repayment of debt and interest payment followed by 22 per cent on defence.