ISLAMABAD: While conceding controlling inflation as challenge for the government, Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh Sunday said non-tax revenue would be increased by over Rs1,000 billion during the current fiscal year.
He said the prices of import-dependent products were not in control of the government. He argued that the inflation was still on lower side than its expectations to remain on higher side, and added in the same breath that the government took the required steps as the borrowing from the central bank was abolished to tackle rising inflationary pressures.
“The prices of imported products such as POL, vegetable ghee/cooking oil and raw materials are not in control of the government, but the government took measures to scale down pressures as the import of raw materials was brought down into zero rating regime, while POL prices were slashed down with effect from September 1, 2019,” Abdul Hafeez Shaikh said at a news conference here at the PID.
Flanked by Secretary Finance Naveed Kamran Baloch, Federal Board of Revenue (FBR) Chairman Shabbar Zaidi and Special Secretary to Finance Ministry Omar Hameed, Dr Shaikh said that the IMF team would be in Islamabad this week and termed this visit as routine matter.
When asked about government’s strategy to bring down primary deficit from 3.5 percent of GDP in last fiscal to 0.6 percent of GDP in the current fiscal under the IMF conditions, he mentioned four areas of focus for achieving desired primary balance and stated that the tax revenues would be maximised, expenditures would be reduced, non-tax revenue would be increased and finally the macroeconomic stability would promote growth and enhance economic activities would yield increased tax collection. However, the secretary finance after the briefing told this correspondent that the primary balance was in surplus in July 2019 and stood at Rs28 billion. “We are just focusing on our agreed target of 7.2 percent of GDP for the current fiscal year,” he added.
However, Abdul Hafeez Shaikh said that the debt stock increased by Rs26 billion in first month (July 2019) of the current fiscal year. He said that the budget deficit so far stood at Rs270 billion and the volume of debt stocks decreased by Rs246 billion because of over valuation of exchange rate in recent couple of months. “Our debt stocks increased by just Rs24 to 26 billion,” he added.
Dr Shaikh said that the government decided to fast-track the process of privatisation and inserted 10 new entities into privatisation list.
“We have also decided to revive Sarmaya-e-Pakistan and will refer 20 state-owned entities (SOEs) to make them ready for privatisation. The National Bank of Pakistan (NBP) and State Life Insurance Company would be prepared for privatisation,” he added.
When asked about lack of confidence shown by businessmen and decreased foreign direct investment in the context of actions taken by the National Accountably Bureau (NAB), he said that it was beauty of our democratic system that anyone could say anything publicly, so there were some views expressed by businessman for the sake of expressing their views. “There was uncertainty last year because of exchange rate fluctuation, because investors plunged into wait and see policy,” he said, and added that now the exchange rate got stabled and economy was moving towards macro-economic stability in gradual manner.
He said that non-tax revenue would be increased by over Rs1,000 billion during the current fiscal year as the government aimed at collecting Rs200 billion through renewal of licences of mobile phone companies. So far, he said, the government has raised Rs70 billion from Jazz and Telenor Pakistan and they would deposit another instalment of Rs70 billion in months ahead. He said Zong would also deposit $477 million equivalent to Rs70 billion so in totality the government expected to generate about Rs200 billion from cellular companies. He said two RLNG plants would be sold out with estimated Rs300 billion in coming December/January 2019-20.
“We are expecting Rs400 billion as non-tax revenues in shape of SBP profits,” he said, and added that the non-tax revenue would fetch over Rs1 trillion in the current fiscal year. It is relevant to mention here that non-tax revenue dipped in last financial year when the Ministry of Finance collected just Rs427 billion in whole financial year and fetched only Rs6 billion in last quarter of 2018-19.
Dr Shaikh said the government was making efforts to overcome theft. He said the theft of electricity has been slashed down to less than Rs10 billion in July.
The PM’s adviser said economy was moving from crisis to stability in gradual manner as everything could not be done overnight. He said the current account deficit has been decreased by 73 percent. He said the position of forex reserves and Pakistani currency has also improved.
He said that the government envisaged GDP growth rate target of 2.4 percent for the current fiscal and hoped that it would be achieved and exceeded on the pretext that the agriculture growth remained zero in last five years, but in this ongoing fiscal year, it was expected to hit 3 percent in 2019-20. He said that the government approved agriculture package of Rs250 billion for enhancing productivity of all major agricultural crops.
On FATF issues, he said the inter-agency body was implementing strategy to combat money laundering and fulfilling other conditions of FATF. On the provision of development funds, he said that the funds of Public Sector Development Programme (PSDP) would be released to the tune of 20 percent in the first quarter of the current fiscal year.
The PM’s adviser deplored that the tax to GDP ratio stood at 11 percent which was one of the lowest in our region. The government, he said, adopted policy to bring those into tax net who are not paying any amount into national kitty. He said that without increasing revenues, the country would continue picking begging bowl and dream of reliance could not be achieved. He said the government is taking all the steps in the interest of people.
The FBR Chairman Shabbar Zaidi said the number of tax filers increased by 0.6 million as it went up from 1.9 million to 2.5 million filers. He said the amount received along with increased number of filers stood at Rs5 billion. He said no compromise will be made on taxes.
He said that the FBR launched mobile application for filing of tax returns. He said the licencing rules for placing track and trace system were issued before his joining as FBR chairman, but they had decided that PPRA Rules would be implemented to award this project.