Default if Pakistan quits IMF programme: Miftah

LAHORE: Federal Finance Minister Miftah Ismail said Friday the government would abolish subsidies and go for positive taxation in order to avoid becoming another Sri Lanka. Speaking in Geo News programme “Aaj Shahzeb Khanzada kay Saath”, he said Pakistan has to spend $21 billion in paying back debt. Besides, he said, the government has increase reserves in the face of $10-12 billion deficit. Against this backdrop, default would be the only option if Pakistan quits IMF programme now, the minister added.

To a question about State Bank’s autonomy and former minister Shaukat Tarin’s insistence on looking at the core inflation, not the consumer price index (CPI), Miftah said he trust bank governor’s competence.

Miftah said that given bank’s autonomy, he would not direct the bank on monetary policy or currency rate, but “I will do my job.” He said he does not concur with every part of policy of bank’s autonomy, adding that raise in the interest rate by the bank would shrink the monetary policy that would help contain inflation.

Speaking in a private TV channel programme, former finance minister Shaukat Tarin said he had been avoiding taxing petroleum products. He said there are two ways — one, purchasing oil from Russia which is available at a discount of Rs45-50 per litre and, two, giving targeted subsidy unlike Rs2,000 per household extended by this government. He criticized the government for raising the taxable income of the salaried person, saying those paying taxes are now out of the tax net. And then the government has subjected them to massive taxation, he lamented. Responding to a question, Hammad Azhar said current inflation rate was 13.5 percent which would be at 20 percent in July. He predicted the rate might increase to over 30 percent. Hammad rejected projected Rs4800 billion figure of budget deficit as incorrect warning they would be facing very high budget deficit next year. He said it was difficult to achieve 5 percent growth. The growth rate would not be even 2-3 percent next year, he said. Talking about Rs7004 billion FBR tax target, Hammad opined it should be Rs8000.