‘Negotiation inching towards successful IMF programme’

FAISALABAD: Economic revival is imperative and in this connection negotiation is inching towards a successful IMF programme, said IMF Resident Representative Mrs Teresa Daban Sanchez.

Talking to Faisalabad Chamber of Commerce and Industry (FCCI) senior vice-president Mian Tanveer Ahmed during her visit to the FCCI, she said that 6.6pc fiscal deficit was a major challenge for Pakistan. “No doubt, friendly countries have supported Pakistan to overcome the critical situation but still it needs a comprehensive IMF support programme for medium and long term sustainability,” she added.

She said that talks had been under way for the last many months and some pending issues would be settled very soon. She said that balance of payments coupled with inflation had further complicated the situation. “The present government has taken some bold initiative but it will take some time to put the economy on right track,” she added and underlined the importance of a strategic balance between reserves and expenditures for stability at the macro level. She said: “No economy could sustain on borrowed loans and hence, Pakistan must take immediate corrective measures to enhance tax collection by broadening the tax base.”

Teresa Daban Sanchez negated the notion that the IMF enforced unnecessary and unrealistic conditions and said that the tax collection must be in conformity with the overall economic growth of the country. She also discussed issues relating to tax rate, competency of FBR to collect taxes through existing tax machinery and other related issues. She said that the Federal Board of Revenue must develop good relations with taxpayers to further broaden the tax base.

Mian Tanveer Ahmed said that the government had taken appropriate steps to overcome the fiscal deficit, which had yielded positive results. He said that during the last seven months, exports had recorded a modest increase of 2.19pc with 12pc increase in foreign remittances. Moreover, a visible decrease of 5.17pc had also been witnessed in imports which helped to bridge the gap between imports and exports. He said that the government had encouraged the export sector with fixation of electricity and gas rate. “These measures would help Pakistan to overcome the financial crisis”, he added. FCCI Standing Committee on Research and Development Chairman Ahmed Hassan said that undocumented economy was a major threat and its mainstreaming was a daunting challenge.

He pointed out other irritants plaguing economy and added that the government was not getting due taxes from it. He said that there were hundreds and thousands of commercial electricity connections but most of them were not paying taxes. He said that the present tax collection machinery lacked competency while people were also reluctant to pay taxes. He told that only 0.5pc people paid taxes in Pakistan and among these include majority of salaried class whose taxes were collected at source.

Meanwhile, addressing an awareness seminar on Islamic banking system, Faisalabad Chamber of Commerce and Industry senior vice-president Mian Tanveer Ahmed said that the Islamic banking system was gaining momentum popularity in different countries and now in Pakistan, its total assets had jumped to Rs.3.96 trillion. He said that the Islamic banking system was taking roots not only in Islamic but also in other countries.

He told that during the last four years, the Islamic banking recorded a growth of 18pc at the global level while in Saudi Arabia, Malaysia, Qatar, Turkey, Indonesia and other Islamic countries, the growth of Islamic Riba free banking was more than 50pc.