No need for IMF bailout package: minister Rana Afzal

KARACHI: Minister of State for Finance Rana Muhammad Afzal on Thursday reiterated the government’s resolve that it won’t resort to the International Monetary Fund (IMF) to obtain funds.

“Pakistan’s economy is on growth track and the government has sufficient resources to meet expenditures,” the newly-appointed state minister said, addressing a media briefing.

Afzal’s reiteration is an apparent response to the reports that the government needs to knock the door of Washington-based lender to improve the country’s balance of payment position.

Yet, Pakistan has already raised $2.5 billion through issuance of Euro and sukuk bonds, while government is also mulling a plan to float another international bond to raise around $1.5 billion in the wake of a positive response to its previous issues.

State finance minister also dispelled an impression that ‘heavy’ external debt repayment is accruing in the next six months.

“The country had needed $6 billion for external debt financing, but now it was reduced to $3.1 billion,” he said.

The minister stressed a need of maintaining the country’s foreign exchange reserves, which stood at $20.154 billion during the week ended December 29.

He said Pakistan could compete with regional economies only by achieving eight percent annual GDP growth. Afzal said the country will welcome foreign loans for development projects.

“The present government has initiated many development projects, which are in completion phase,” he added. “These projects will help in growth of economic and social sectors.”

State finance minister further said the present government had suffered a major blow due to removal of elected prime minister at a time when economic indicators were favourable.

The minister said exports grew 17 percent during the past five months. The government is assisting exporters through Prime Minister’s trade enhancement package.

The government has taken several initiatives to discourage imports of luxury and non-essential items through imposition of regulatory duty and 100 percent cash margin on imports.

“The measures will help the country curtail current account and fiscal deficits,” Afzal added.

He said the present government’s initiatives also accelerated many sectors, including agriculture and large scale manufacturing.

The government granted several incentives to the industries in order to provide better working environment for manufacturing.

Meanwhile, minister of state for finance, talking to the office bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the government has started crackdown against 10,000 tax dodgers and evaders, who have taxable income but remained outside the tax net.

Afzal said the Federal Board of Revenue (FBR) is issuing notices to non-filers of income tax returns. He said the cases were selected on the basis of transaction details.

The state minister said number of income tax return filers increased due to various measures taken by the government, such as increase in withholding tax rates for non-filers.

Withholding tax rate of 0.4 percent applicable on non-cash banking transactions above Rs50,000 in a day was imposed to increase the cost for non-filers. The minister said the government always supports the business community.

He said the prime minister gives priority to exporters and manufacturers. “The government will soon resolve the longstanding issue of sales tax refunds.”

Afzal said the government will issue around Rs11 billion of stuck refunds a month to reduce refund pileups.

The state finance minister said the government had reintroduced zero-rating of sales tax to facilitate the business community and to ease their liquidity crunch.

The minister urged the business community to send their sector-specific budget proposals.

Earlier, Ghazanfar Bilour, president of FPCCI apprised the state minister of the difficulties faced by the business community, especially due to high cost of doing business.