Sunday September 26, 2021

Govt to rework IMF deal, says Tarin

ISLAMABAD: Minister for Finance and Revenue Shaukat Tarin Monday said the IMF agreement made ‘some excesses’ through imposing very harsh conditions under the $6 billion Extended Fund Facility (EFF) programme.

In his maiden briefing to parliamentarians during the National Assembly Standing Committee on Finance meeting here at the Parliament House under the Chairmanship of Faiz Ahmed Kamoka, Shaukat Tarin made it clear that the government would re-negotiate with the IMF on account of its demand for hiking power tariff and raising tax revenue.

Shaukat Tarin shared his thoughts publicly after assuming charge of ministerial portfolio and said that the era of economic ‘consolidation’ was underway since 2019 thus resulting into creating more difficulties on economic front. The lack of GDP growth had resulted in generating no tax revenue, no job opportunities, and many other problems on the economic front, he added.

He made it clear that he was making an effort to convince the IMF for giving Pakistan a lenient attitude in the wake of the emergence of the third wave of COVID-19 pandemic. “Now we will have to stand up to talk to the IMF as the demand of the Fund for hiking electricity resulted into hiking inflationary pressures and caused corruption. He said reduction into circular debt cannot be done through hiking power tariff only as some alternate plan needs to be implemented to solve this problem. “Instead of raising tax rates, the government will move towards broadening of the tax base,” the minister said. The minister made it clear that the government would privatise those state-owned enterprises that could not be run into the domain of the public sector. He said that the government would increase allocation for development projects through Public Sector Development Programme (PSDP). He said that the centre would provide equitable growth opportunities for all provinces. He said that he believed in the supremacy of the Parliament.

Tarin said the phase of consolidation was underway since 2019, but without moving the wheel of the economy, there would be no revenue and no job creation for the people of Pakistan. He said that in the wake of low GDP growth, the government was left with no option but to pay higher capacity payments through enhanced electricity generation. He said that if the GDP growth would touch 4 to 5 percent next fiscal year, it would not be sufficient to meet our increasing requirements. He said that Pakistan required a shift for moving towards a higher growth trajectory. Tarin said that they would tell the IMF that the world was giving stimulus packages on account of financial and monetary accounts in order to spur growth, but the sword of tough conditions was hanging on our heads so they would make efforts to convince IMF to show lenient attitude towards Pakistan. The minister said that he did not believe in increasing the taxation rate but they would make efforts to bring non-filers into the tax net. He said that the element of harassment of FBR would be abolished and their discretionary powers would be reduced. The desired changes would be brought into audit system, he added.

The minister said that the FBR had done detailed scrutiny and once his file got missing. If the former minister is not spared then it can be imagined how the FBR behaves with other common citizens. He said efforts would be made to jack up tax to GDP by 1 percent in every financial year. “But it cannot be done without improving growth trajectory as Pakistan requires higher growth over next three decades,” he said. He said that the government identified 10 to 12 major sectors and the economic experts were assigned to prepare roadmap for achieving price stability, agriculture, industry, tax revenues, housing, social protection, services sector, debt management and other issues. He said that out of total revenue of provinces, 85 percent was spent on total nine big cities and health and education were the most neglected sector. He said that there was need to focus on housing sector which right at the moment was just 0.25 percent of our country’s GDP while it possessed significant share in other parts of the world.

Khalid Mustafa: Shaukat Tarin with the input from top notches has worked out the strategy not to increase the electricity tariff that will be shared with IMF in his maiden formal interaction scheduled somewhere in the mid of current month, a senior official at Petroleum Division confided to The News. “The World Bank has shown softness towards the government’s plan not to increase the electricity tariff with the condition that the government would curtail the circular debt effectively. The IMF is so far rigid to this effect and not showing flexibility,” he said. However, Tarin who will spearhead the Pakistan financial experts with IMF during the upcoming talks, will fight the case of not increasing the tariff arguing it will not only choke the economic activities in the country but will also cause more electricity theft.

IMF wants to increase the electricity tariff by Rs4.60 per unit in two and half years’ time, but since the US dollar has depreciated to close to Rs153 from Rs161 which is why one Pak Rupee will be curtailed in the tariff from Rs4.60. In the remaining Rs3.60 per unit, the government will bring down the tariff by Re0.60 per unit through buying out 11 old power plants based on furnace oil.