Islamabad   -   Adviser to Prime Minister on Finance Hafeez Shaikh Sunday claimed that the country’s economy has moved from turmoil to stability and the government is eyeing a non-tax revenue of Rs1,000 billion during current fiscal.

Addressing a press conference Shaikh gave details of the expected non-taxable proceeds and said they were considering privatising some major organisations like the National Bank of Pakistan and State Life Insurance.

The economy was on the verge of bankruptcy when this government came to power but now it has stabilised thanks to a drastic cut in government expenditure, increased tax collection, decrease in current account deficit, and a better performance of the agriculture sector, he said.

“Our Economy has moved from turmoil to stability, our foreign exchange reserves, exchange rate and stock market is stable which indicates that in the days ahead the hopes that Pakistani people have from this government will be fulfilled,” the advisor said.

Giving details of major sources of the non-tax income, he said a good development has taken place in cellular sector as the government has received Rs70 billion from Jazz and Telenor and was expecting another Rs70 billion from them. Similarly, he said, they were expecting to get Rs70 billion from Zong. This way the total amount received from the cellular companies would be around Rs200 billion, he added.

Hafeez Shaikh said that the privatization of RLNG plants is expected to complete by December or January and government would get Rs300 billion from it. If the exchange rates remained stable, they would receive around Rs400 billion by privatising the State Bank of Pakistan, he said. The total of all these proceeds is expected to be more than Rs1,000 billion which would enable the government to reduce the loans and spend on the projects of public benefits, he added.

The adviser said that the current account deficit was at destructive level which has been decreased from Rs19.5 billion to Rs13.5 billion. In July the exports were increased and the imports decreased as compare to the previous year. The current account deficit was Rs2.1 billion during July last year which was reduced by 73 percent to Rs0.6 billion during July 2019.

“The rich are very poor at paying taxes, and we have fixed a huge target (of getting taxes from them”. In the first two months of fiscal 2018-19, Rs509 billion tax had been collected, which is 15 percent higher than Rs580 billion corresponding collection of the last financial year. “Our inland taxed have been increased by 38 percent,” he claimed.

Also, the number of tax filers were 1.9 million which has increased by around 6 lakh to 2.5 million, the adviser said, adding that there would be further increase in this number.

He said the government has drastically reduced its expenditure and haven’t done any borrowing from the State Bank of Pakistan, and during past around two months no supplementary grant was approved. In July the deficit was Rs270 billion, but due to better exchange rate they have saved Rs246 billion in debt stock, he said. It meant that the government debt increased by only Rs24 billion during the last month, he added.

“The growth rate target for the current fiscal is 2.4 percent and let me share a good news with you that we can not only easily meet this target but will go beyond it,” Shaikh said. The main reason for the growth acceleration is agriculture growth, he said.

The government has recently approved a package of around Rs250 billion which would increase the productivity, he said. “Our agriculture growth was negative during last five years and now we hope... it will grow more than 3 percent, he claimed.

Mr Shaikh said the process of privatization has been expedited and the privatization process of 10 state owned enterprises is on the fast track. The government has activated Sarmaya Pakistan program and have started the fast track re-structuring of 20 other State Owned Entities.

He said there were chances of betterment in the performance of National Bank of Pakistan and State Life Insurance and the government was considering their privatization. The privatization of Discos was already under process, he added.

To increase the productivity the government was trying to reduce the circular debt and it had succeeded in reducing it from Rs38 billion per month to less than Rs10 billion.

All of the pending verified sales tax refund of Rs22 bullion have been paid off, he said. Similarly, all of the middle class tax payer who have an income tax refund of less than Rs100,000 have been cleared, he added.

The advisor to PM said a new system has been introduced since 23rd of the last month under which speedy refunds are given to the exporters. He said that from now onwards refunds would be automatic and as soon as someone enters their data all the amount would be refunded by 16th of every month.

Asked how the government would secure the primary balance of 0.6 percent as agreed with the IMF, Hafeez Shaikh said that four to five indicators were required for the purpose which included expanding the tax base, reducing expenditures to certain level, increasing non-tax revenues, accelerating economic activities and bringing basic macroeconomic stability. “I think the government is moving toward the achievement of these targets,” he commented.