ISLAMABAD: Finance Minister Shaukat Tarin said stabilization was not more affordable for the Pakistani economy which is now expected to shift to higher growth and that the International Monetary Fund (IMF) would be convinced to ease the conditions, in particular those linked to the increase in electricity prices.

Testifying before the Standing Committee on Finance of the National Assembly, Tarin said rising electricity tariffs lead to corruption and affect economic growth. The conditions agreed to under the IMF program were very harsh, he said.

He said the government would take alternative measures to reduce circular debt instead of increasing tariffs. Likewise, he said, net taxes would be broadened instead of increased taxes to meet revenue targets. However, he admitted that public entities that the government could not manage in the public sector would be privatized.

The finance minister said the IMF was confident it had a sympathetic point of view towards Pakistan after it was hit by the third wave of the coronavirus pandemic. Unless the country embraces higher economic growth, nothing would improve and if we continued the stabilization that has been in place for more than two years, neither revenue collection will increase nor job opportunities. will only be available to people where the productive capacity of the economy could improve, he explained.

Shaukat Tarin tells NA panel it was a mistake to keep the key rate at 13.25%

He informed the committee that the country had been in stabilization mode since 2019, but this was no longer sustainable and if the government continued with the same policy, there would be no economic growth for the next two years. In the next budget, he said, the public sector development program would be increased so that all provinces have equal opportunities for growth.

He said that many complications emerge in the absence of economic growth and that one of them is the continued increase in capacity payments in the electricity sector. Even a 4% to 5% growth next year would not be enough, he said.

He told the committee that a comprehensive strategy had been formulated to shift gears and move on to higher economic growth. He also criticized the high policy rates of the State Bank of Pakistan (SBP). It was a mistake to keep the key rate at 13.25% in the past, he said.

The minister, who appeared before the standing committee for the first time after taking office last month, said the IMF should be explained that the world continues to lose budget and money purses due to the health pandemic, but that Pakistan was still facing these tough guys. conditions. He expressed hope that IMF staff will understand Pakistan’s position as the government asks for a sympathetic view due to the pandemic.

He explained that the IMF’s target could be achieved through alternative measures, as the higher electricity tariffs only encouraged corruption.

The finance minister said he did not believe in raising taxes to increase revenue collection, but that those outside the tax net would be tapped into. In addition, he said, the chances of harassment from RBF officials would be eliminated for which audit procedures would be changed.

With the country lacking adequate planning, he said, it selected 10 to 12 sectors that economic experts had already started working on so that they could develop long-term planning for areas such as stability of the economy. prices, agriculture, industry, income, housing, social protection, national services, debt management and privatization of loss-making public entities.

Minister Tarin told the committee that 85% of provincial revenues were spent in nine major cities, while the health and education sectors across the country were underfunded and ignored. At the same time, the housing sector needed more attention and it only accounted for 0.25% of Pakistan’s GDP compared to 80% of the US economy.

He said Pakistan’s exports have not increased because most of the businessmen run the domestic industry while foreign investment is very limited.

Mr Tarin told the standing committee that China will be asked to provide jobs for 10 million Pakistanis in its industry because it has employed workers from all over the country.

Revised budget strategy document

Pakistani Muslim League-Nawaz (PML-N) leader Dr Aisha Ghaus-Pasha welcomed the finance minister’s briefing and said it was a positive change that could generate ‘hope’ in the system . She said what the minister said was difficult, but the country needed to come out of difficult conditions and reconsider the budget strategy paper.

The minister has agreed to come back with a revised budget strategy document and would like to have a consensus. He also agreed that the sales tax system should be improved. He said the 17% general sales tax rate was very high and a mechanism had been prepared for its reduction.

He said the government was also working on a sales tax system for small businesses and that a positive improvement would be communicated to the committee soon.

Posted in Dawn on May 4, 2021