No new taxes despite Rs386bn shortfall, NA told

ISLAMABAD: Parliamentary Secretary for Finance Saad Waseem Sheikh has said that the government has no plans to impose additional taxes to address the shortfall in tax collection.

He said that efforts are underway to meet the revenue collection target for the current fiscal year.

During the Question Hour in the National Assembly, Mehreen Razak Bhutto raised a supplementary question, asking how the Federal Board of Revenue (FBR) plans to meet the tax collection target given the Rs386 billion shortfall.

In response, Parliamentary Secretary Saad Waseem acknowledged the shortfall but assured that no new taxes are planned to bridge the gap.

In a written reply to Dr. Nafisa Shah, who enquired about the government’s plans for debt retirement and the percentage of debt being rolled over, the Ministry of Finance said that the government’s strategy is focused on maintaining public debt at sustainable levels.

The written reply highlighted that due to economic stabilisation policies, a primary surplus is being generated, the exchange rate has stabilised, and the State Bank of Pakistan (SBP) has reduced interest rates significantly, driven by declining inflation. “All these factors are expected to put public debt on a downward trajectory in the coming years.”

The ministry further stated that the government is actively managing its debt obligations, both external and domestic, and utilising available cash balances for principal and interest repayments.

Government debt as a percentage of GDP had stood at 67.5% in June 2024, down from 74.9% in June 2023, marking the lowest level in several years.

This level is projected to decline further due to improved macroeconomic indicators, including a stable exchange rate, primary surplus, and effective debt management.

Domestic Debt: The Ministry of Finance had retired approximately PKR 1.7 trillion in government securities, while the remaining were serviced and refinanced.

External Debt Rollover: In the first half of FY25, $4 billion were rolled over, and an additional $5 billion are expected to be rolled over in the second half. These figures exclude central bank deposits from UAE (USD 3.45 billion) and Kuwait (USD 250 million).

The ministry added that the Average Time to Maturity (ATM) of government debt securities had increased from 2.7 years in June 2024 to 3.3 years in December 2024, reducing gross financing needs (GFN).

The ministry anticipates that effective debt management, coupled with declining interest rates, will save approximately Rs1 trillion in interest payments this year.

Additionally, the ministry announced progress toward the inaugural issuance of green sukuk in the domestic market and Panda Bonds in Chinese capital markets this calendar year. These instruments are expected to provide cheaper funding options compared to conventional borrowing methods like PIBs and Eurodollar bonds.

Parliamentary Secretary for Planning and Development Wajiha Qamar informed the house that the first phase of the Seventh Agriculture Census has been completed. She said that the census will aid in informed decision-making to uplift the agriculture sector.

She said that the total estimated cost of the census is Rs448.5 million, fully financed through the PBS Regular Budget. Field operations for data collection are currently underway and will conclude by February 2025, with the results expected to be published in May 2025. In response to a query by Mirza Ikhtiar Baig, the Commerce Ministry clarified that the European Union (EU) has not banned rice imports from Pakistan.

The ministry explained that while 32 rice shipments from Pakistan faced interceptions due to non-compliance with the EU’s stringent sanitary and phytosanitary (SPS) standards, such incidents are not unique to Pakistan.

Shipments from other rice-exporting countries also face similar inspections if found non-compliant with regulatory requirements.