ISLAMABAD: Federal Finance Minister Shaukat Tarin has said Pakistan may have to send experts to Afghanistan because of brain drain there.
“We will deal with the new government in Afghanistan. They require assistance and we may have to dispatch experts because of the brain drain in Afghanistan. The situation is fluid and we are analysing it. The West has stopped foreign reserves of Afghanistan to the tune of $10 billion, as the IMF has stopped $400 million and many others so Kabul will be facing a scarcity of foreign exchange. Our bilateral trade will surge but we may have to undertake bilateral trade in the Pak rupee,” Federal Minister for Finance Shaukat Tarin said while giving an extensive briefing to the Senate Standing Committee on Finance which met here at the Parliament House on Thursday with Senator Taleh Mehmood in the chair.
Conceding that inflation has decreased but has not come down to the desired levels, Mr Tarin said that the government was building up strategic reserves of essential food commodities to meet domestic as well as Afghanistan’s requirements.
“Although, inflationary pressures have started receding, they have not come down to the desired levels. We need administrative measures and deputy commissioners and assistant commissioners in their respective areas will be assigned to curtail price-hike,” he said.
The minister said that the government had provided a stimulus to economic growth after doing consolidation and so far “we are on the track in the first two months of the current fiscal. Imports are increasing and tax revenues have also gone up by 42 per cent.”
“The Afghan situation is uncertain and we are analysing it on the basis of the ground scenario. The West is not favorable and we are keeping our minds open. Multilateral donors have stopped funding to the tune of $10 billion so Afghanistan will have to face a scarcity of foreign currency. The bilateral trade might increase. We don’t have any problem in dealing with new Afghan government. “Pakistan’s trade deficit stands at $4 billion and remittances are hovering around $2.5 billion. The demand has gone up and now converted into deficit. There is a need to keep it under control” he added.
Exports of goods will be standing at $31 billion and services at $7.5 billion so total exports of goods and services would go up to $38.5 billion. We are working carefully and we will take steps to moderate level of growth.
“On tax revenue, FBR revenues are ahead of target by 23 percent. The track and trace system will be placed for five major sectors. The Point of Sale (POS) will integrate. Receipts will be standardised and frivolous notices will be withdrawn,” he assured.
“Artificial intelligence will be used to broaden tax base as 15 million data about non-filers is available and 85 percent of the data is accurate. Notices will be served and then reminders will be issued. Then third-party auditors will be involved to give last chance and then the FBR will take action against willful defaulters.”
The minister said that the exchange rate is the domain of the SBP and will depend on inflows coming into the market. “The real effective exchange rate is close to 98 percent. It is my desire competitiveness should not be compromised. It should be reflective of the realistic effective exchange rate.”
About Kamyab Pakistan Programme, he said that the IMF had asked for soft launch, as it did not want to launch a programme that proved disastrous in the end. “We will recommend the PM to launch KPP in KP and Balochistan in the first stage to be replicated in other provinces. The bottom-up approach will be adopted as the government will not revert back from objectives of poverty alleviation.”
PMLN Senator Sadia Abbasi raised the issue of increasing inflationary pressures following exchange rate depreciation, the minister replied that initially the depreciation was done under the IMF programme with utility tariff going up and policy rate increasing.
“The growth tumbled and price-hikes increased. The core inflation stood at 6.2 per cent and food inflation at 10.5 percent. Commodity prices went up after 15 years with 70 to 80 per cent increase. Oil prices went up by 74 per cent. The government had to import wheat, sugar, pluses, POL and palm oil. Wheat prices went up by 40 per cent. The government is analysing processing of eight to 10 basic commodities because there is a massive margin of profits that needs to be curtailed.”
When asked about the FBR data hacking, he said that the official data will be protected. The data was hacked in 2019. There will be no scarcity of funds for bringing in new technology. IT professionals will be needed in the FBR and PRAL.
“The IMF asks for an increase in Personal Income Tax by Rs150 billion so it is difficult to jack up the ceiling limit of taxable income up to Rs 100,000 per month. “I will not put burden on masses through reduction into petroleum levy, as it will be adjusted from other avenues. It will have a cascading effect on the poor, he concluded.
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