Finance minister tells National Assembly Standing Committee on Finance government is willing to work with opposition on a Charter of Economy
Finance Minister Shaukat Tarin on Thursday claimed he had spoken with senior officials of the International Monetary Fund (IMF) and they had acknowledged that the government’s plans for revenue generation through administrative measures held some merit.
Briefing the National Assembly Standing Committee on Finance, the federal minister said that the government had presented an “alternate plan” to that agreed with the IMF earlier this year, adding that the global lender had admitted Islamabad’s concerns regarding growth were merited. “Now we will have to demonstrate that our alternate plan on revenue generation and curtailing circular debt is practical and is yielding positive results in the next few months,” he said. “The IMF will club the sixth and seventh reviews in September 2021,” he said of the money-lender’s next scheduled review to continue the Extended Fund Facility of $6 billion of which Islamabad has been disbursed $2 billion thus far.
Tarin explained that he did not agree to the IMF conditions agreed upon between former finance minister Abdul Hafeez Shaikh and the global lender, stressing that it called for the government to withdraw all tax exemptions. However, he maintained, this did not mean that Pakistan wanted to leave the IMF program, as doing so would leave a shortfall of Rs. 400 billion in the upcoming fiscal.
The finance minister said the government planned to raise additional funding through the issuance of Sukkuk bonds, green bonds and panda bonds worth $2.5 billion. These, he explained, would be issued in the next three to six months.
To a question, he said that the IMF had called for the government to impose an additional Rs. 150 billion personal income tax, but the government had explained it wanted to focus on expanding the tax base, rather than increasing the burden on existing taxpayers. On the IMF’s ask for Pakistan to raise its electricity tariff by 25 percent, he said the lender’s solution to the capacity payments and low collections crisis would lead to massive increases to power tariffs.
The government’s alternate plan, he said, would focus on fixing structural defects through innovative formulas to curb circular debt. “The IMF emphasized upon continuation of talks to prove that our adopted strategy is practical and is yielding positive results on account of revenue generation and curtailing of circular debt,” he said.
Charter of Economy
The finance minister also said that the Pakistan Tehreek-e-Insaf-led government was willing to speak with the opposition on its proposed Charter of Economy, adding that this should create an environment conducive to a national consensus on economy.
To a question about concerns raised by the business community on the Budget 2021-22 allowing the Federal Bureau of Revenue to arrest taxpayers if they were believed to concealing their income, he reiterated that only the FBR chairman and the finance minister would have the authority to order any arrests. The assistant commissioner of Inland Revenue officer would not have this mandate, he stressed, adding the FBR would send notices through an independent third party to the 7.2 million tax evaders it had information on.
The finance minister also said that the government would provide clean lending to small- and medium-enterprises valued at Rs. 100 billion, explaining the government had allocated Rs. 12 billion in the budget to provide subsidies to keep interest low. He similarly vowed to review the issues faced by non-profit organizations in opening bank accounts.