ISLAMABAD – Federal Minister for Finance and Revenue Miftah Ismail on Saturday said that the targets set in the annual budget 2022-23 are to achieve fiscal consolidation and provide relief to the masses from the inflation rate.
He also said that the budget preparation was the most difficult thing to do, as the country is going through a very critical phase. “I have never seen a more difficult time in the last 30 years where there are global challenges on one hand and nothing has been done by the government or administration on the other,” the Finance Minister said this while addressing the post-budget press conference along with Federal Minister for Information and Broadcasting Marriyum Aurengzab, Minister of State for Finance Aisha Ghaus Pasha here.
The minister once again criticized the former government for giving subsidies on oil and electricity. “In violation of the agreements signed with the IMF, the previous government gave subsidies on fuel in February, March this year. However, PM Shehbaz Sharif took difficult decisions for the sake of the country. Now, the country has left no option other than tough decisions.” He further said that the government has taken tough decisions to avoid Sri Lanka-like situation in Pakistan.
Sharing details of the budget, Miftah Ismail informed that the government has decided to restrict the budget deficit at Rs4.598 trillion in next fiscal year. He criticized the previous government for recording four highest ever budget deficits of the country in the last four years.
Imran Khan-led government had borrowed Rs 20,000 billion during its tenure of quarter to four years which is equal to 80 percent of the total debt taken since the times of Liaqat Ali, Khawaja Nazim-u-Din, Ayub Khan, Zulfiqar Ali Bhutto, Benazir Bhutto, Nawaz Sharif till Shahid Khaqan Abbasi. Massive borrowing has increased debt servicing to Rs3.95 trillion for the next fiscal year from Rs1.5 trillion of 2018.
The Finance Minister said that the government has set tax collection target at Rs7 trillion and non-tax collection target at Rs2 trillion making overall revenues at Rs9 trillion. The government would transfer Rs4 trillion to the four provinces under the National Finance Commission (NFC) award and would pay Rs4 trillion as debt servicing, leaving only Rs1 trillion to the centre to run other expenditures including civil government’s expenditures, defence budget, development budget and subsidies. We have reduced our expenditures as well as subsidy on power and gas to reduce deficits.
Miftah Ismail said that the government has enhanced the budget of Benazir Income Support Program (BISP) has been increased by 35 to 40 percent. He said that flour, sugar and ghee will be provided on discounted rates at Utility Stores Corporation throughout the year. He further said that palm oil prices have increased in the international market. However, the government has allocated Rs20 billion in the budget to promote the cultivation of oil seeds.
He said that IMF is not happy with Pakistan for providing relief to the salaried class in the budget. The government would bring 2.5 million shopkeepers into the tax net this year under the fixed income and sales tax system for retailers. The tax on small-scale retailers will range from Rs3,000-Rs10,000 and will be collected through their electricity bills.
Miftah Ismail said we have imposed additional taxes on the well-off people while efforts have been made to reduce the tax on personal income tax. He said Pakistan is a dignified nuclear power state and we will have to correct the course of our economy. Special emphasis is being given to bolster our exports, expressing the confidence that these will touch $35 billion in the next fiscal year, he added.
| Finance minister says govt has decided to restrict budget deficit at Rs4.598tr | No option but to take ‘difficult decisions’ to avert economic crisis | Admits petroleum levy could increase inflation
| Target set to bring 2.5m shopkeepers into tax net | Govt needs to approach other states for loans, packages and deposits
Talking about the energy sector, the Finance Minister informed that the government has paid Rs1100 billion subsidies to the power sector and Rs500 billion losses occurred due to the circular debt in the outgoing fiscal year. “We are generating Rs30-35 per unit of electricity,” he said and claimed that they have the most efficient power generation plants in the world. But, maladministration, flaws rate fixation system, transmission and distribution losses and lower bill collection were major reasons behind the high power generation rate. The country’s economy cannot afford such a loss, he added.
He said that Rs400 billion subsidies were given to the gas sector. Circular debt in gas sector has accumulated at Rs1.4 trillion. He said that the government would announce new gas rates, which would be competitive with regional countries. He assured that the government would not let any factory be closed as they provide jobs to the people. The government is facing losses in the gas sector, he said, adding that it is not known whether the gas is being stolen or it is evaporating. He claimed that around $2.4 billion gas of SSGC goes unaccounted every year.
He replied to a question that Prime Minister would constitute as task force on leakage of three trillion rupees tax from the system.
He admitted that inflation could increase following the decision of levying petroleum levy, as the government had projected to generate Rs750 billion from this levy. He also informed that the government would expedite the process of privatization. He did not reply to the question about the dollar rate on which the government had made budget. As part of the government efforts to mitigate the impact of fuel price hike, the deserving people will start receiving Rs2,000 from June, he said.
The Finance Minister said that it was not his priority to lodge cases against the former rulers. “Imran Khan and his team were not only incompetent but they were involved in corruption,” he said,
Miftah Ismail said they have introduced a new dispute resolution mechanism to solve cases involving the Federal Board of Revenue (FBR). Under the new mechanism, the FBR would select one referee and the complainant would select one and both of these nominees will choose the third individual who would act as an umpire. “The decision will be based on the majority,” he said, adding that it would help address the concerns raised by the business community.
Minister of State for Finance Aisha Ghaus Pasha said that our aim is to ensure economic stability and take the country towards the track of growth. She said the philosophy of the budget in these difficult times had been to put minimum burden on the common man. He said we are providing relief to the common man and this includes the cash amount of two thousand rupees to the deserving families.
Aisha Ghaus Pasha said that subsidy has been given to the farmers to enhance agro productivity and cut the import bill of food items. She said reducing budget deficit and non-imposition of indirect taxes are anti-inflationary measures which were taken to protect the poor.
The minister said worsening that the government administration had caused huge damage to the national economy and drifted it to the verge of collapse that compelled the coalition government to present a tough budget.
He e said if that maladministration were not addressed timely, it would cause further devastation and that was why the incumbent government had to present such a budget to address those issues.
Miftah said there was a need to correct the country administratively, otherwise, its economy would not be run. “We have to go to other countries for loans, packages and deposits. Pakistan is a proud country, a country of proud people, a nuclear power country, and we will have to fix our economy,” he said. “We should not incur such expenditures that we cannot afford.”