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May 26, 2019

Hafeez allays IMF bailout fears with economic roadmap

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May 26, 2019

By News Desk

ISLAMABAD: Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh on Saturday unveiled Pakistan Tehrik-e-Insaf (PTI) government’s short- and long-term economic roadmaps, focusing on fiscal consolidation and revenue mobilisation, to put the economy on growth trajectory after steering it through the stabilisation phase of one year.

The adviser was addressing a press conference flanked by Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtiar, Special Assistant to Prime Minister on Information Firdous Ashiq Awan, Minister for Power Division Omar Ayub Khan, State Minister for Revenues, Hammad Azhar and other senior government officials.

The Prime Minister’s aide said the next fiscal year would be the year of stabilisation for the economy, focus on saving the economy from different vulnerabilities and after achieving the target of stabilisation, the journey for growth would start. He said the upcoming budget for the fiscal year 2019-20 would come with austerity measures to reduce government expenditures, adding civilian, military and private sector would contribute to reducing fiscal expenditures.

The PM’s adviser said the government had also devised a comprehensive mechanism for gradual reduction of electricity losses from current Rs38 billion per month to zero by 2020.

He said the Federal Board of Revenue (FBR) would be given Rs5.5 trillion revenue collection target for the next year and that target could be achieved by taking many strategic measures.

He said enhancing tax collection was imperative to provide relief to the vulnerable segments of society with the provision of subsidies in different sectors.

The PM’s aide said Pakistan had the lowest tax-to-GDP ratio in the region, which was just 11 per cent compared to 16-20 per cent in the regional countries. He said only two million people were paying taxes in Pakistan, which included 0.6 million salaried class, adding 85 per cent of the total tax was being paid by just 360 individuals or companies.

The PM’s adviser said there were around 341,000 industrial utility connections but only 40,000 were registered for sales tax, while out of 3,100,000 commercial consumers, only 1,400,000 were registered taxpayers.

The PM’s adviser said the government had recently announced an Asset Declaration Scheme to give an opportunity to individuals to declare their undisclosed assets by paying just 4 per cent taxes, adding the government would go after tax evaders once the deadline for the scheme ends on June 30.

Dr Shaikh said the country would undergo a period of stabilisation for around six to 12 months and after that the government would focus on recovery and high growth. He said besides fiscal consolidation and revenue mobilisations, the government would focus on inflation to mitigate its impact on vulnerable segments of society.

He said exchange rate and increase in oil prices at international market were the two main reasons for inflation. However, he promised the government was planning to provide subsidy to protect low income people.

He said the government would devise strategies to ensure welfare of common people and help lessen their problems. He said the hike in electricity price would not affect 75 per cent consumers who utilise less than 300 units as the government would provide subsidy of Rs 216 for that purpose.

Similarly increase in gas prices would not affect 40 per cent low-end consumers.

Another feature of the economic roadmap, he said, would be the development of backward areas as the government would initiate Rs50 billion projects in those parts of the country.

He said Rs6 billion had been provided as Ramadan Relief Package and another Rs30 billion subsidy would be provided on food items in the next budget. He said job creation was one of the priorities of the government, adding the government’s programme of building five million houses would create jobs in 18 sectors of economy.

The PM’s adviser said land had already been acquired in different cities and that programme would be operationalised soon. He said the government had also launched Kamyab Jawan programme under which Rs100 billion had been earmarked to provide loans to youth to start their own businesses.

Similarly, he said agriculture sector would be boosted to help create jobs. He said funds would be spent on 18 agricultural projects in coordination with the provinces.

The PM’s adviser said the Public Sector Development Porgramme (PSDP) funding had also been raised up to Rs925 billion to complete all big projects, including dams and roads. The government was also focusing on enhancing exports and had already made arrangements with China and Turkey to access those markets.

He said the government had taken some decisions to stabilise economy, adding it had signed agreement of $6 billion at the interest rate of 3.5 percent with the International Monetary Fund which would help stabilise economy.

The programme would also give a positive signal at international level and the government would be able to get additional $2 to $3 billion from World Bank and the Asian Development Bank.

He said in addition the government was provided $3.2 billion oil on deferred payments facility by Saudi Arabia which would be operational from July 1.

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