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July 5, 2019

IMF bailout shows int’l confidence in Pakistan: Hafeez

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July 5, 2019

ISLAMABAD: Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh has said the International Monetary Fund’s (IMF) approval of a $6 billion bailout for Pakistan has demonstrated that international institutions are satisfied in the country’s resolve towards fiscal discipline.

Addressing a news conference here on Thursday, he said with the approval of the IMF package, other international institutions have now started releasing funds for the country. “The Asian Development Bank (ADB) is willing to extend an additional $3.4 billion loan, of which $2.1 billion is likely to be received during current year,” he said and hoped to get even more funds from the bank.

Sheikh was flanked by Minister for Revenue Hammad Azhar and Federal Board of Revenue (FBR) Chairman Shabbar Zaidi.Similarly, he said, the World Bank (WB) was also ready to provide loans to Pakistan. He clarified that these loans from the ADB and WB would not be linked to any projects but for the purpose of budgetary support and general expenditures.

Sheikh said the government had conveyed a message that being a responsible country it was maintaining fiscal discipline, mobilising taxes and taking difficult decisions to strengthen its economy.

Sheikh said the first tranche of $1 billion under IMF Extended Fund Facility (EFF) program would be received by July 8, adding the Fund would provide $2 billion every year. He said the markup at the rate of 3 per cent would be applicable on the facility and payback period would be around 10 years, adding there were no additional conditions for the program.

The adviser said negotiations with the IMF were held in a cordial manner and every member had expressed their confidence on the government’s economic policies and that was commendable. Sheikh said measures would be introduced for sustaining the positive impacts of the programme and providing a base for long term sustainable economic growth and social development in the country. Highlighting the fiscal constraints of the economy, he said the national economy was passing through a crucial stage of its economic history, adding that debts had been soared to Rs31,000 billion.

The government had taken tough decisions to pay back these loans and used different options including acquiring deposits from the brotherly countries like Saudi Arabia, United Arab Emirates and Qatar, he said, adding agreements were made with Saudi Arabia and for oil facility on deferred payments.

The adviser further said despite fiscal constraints, the government did not compromise on developmental expenditures and the protection of he vulnerable segments of society. On the Assets Declaration Scheme, Sheikh said a record 137,000 people declared their assets and deposited taxes worth Rs 70 billion under the Asset Declaration Scheme which expired on July 3. “This is the biggest number of beneficiaries in a single scheme in Pakistan’s history which made it unique to other schemes in which the people also declared their assets worth over Rs3,000 billion.”

The adviser said it was a step towards documenting the national economy, encouraging a tax compliance culture and ending the culture of possessing Benami properties in the country. He said further steps would be taken to improve the efficiency of the Federal Board of Revenue (FBR) in order to realise the revenue collection target of Rs5,555 billion set for the fiscal year 2019-20.

Replying to a question, FBR Chairman Shabbar Zaidi said the business community had been assured that their issues would be addressed, adding a risk management system was introduced for the clearance of consignments of raw material and the condition of certificate was removed in order to stop human interaction and curb any harassment.

To another question, Zaidi said the data of tax evaders had been collected, adding that field formations had been directed to send notices to them for ensuring tax compliance in a polite and respectful manner. He said the data of about 341,000 industrial consumers and 31,000 commercial consumers had so far been collected, who would be served notices in the days to come for fulfilling their tax obligations

He said budgetary allocation for under privileged women had been increased from Rs100 billion to Rs190 billion, besides introducing special measures for their health and other facilities.

In order to promote the economy on the long term and sustainable basis, special incentives were announced for industrial sector development and they were provided subsidies on electricity and gas, he said. For enhancing the dollar earning capacity, special incentives in federal budget were announced for the export oriented industry and taxes and duties on the import of raw material were removed, he added.

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