Deal with IMF on our terms: Ishaq Dar

Jun 15, 2013

ISLAMABAD –
Vowing to put the staggering economy back on track at any cost, Finance Minister Ishaq Dar has said that Pakistan will negotiate with International Monetary Fund (IMF) on its ‘own terms’ for fresh loan package to repay the previous one and will bear ‘no dictation’ in this regard.

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“We try to put economy on track what may come by imposing tax on affluent class and people of Pakistan should support me,” said Dar said while addressing a post-budget press conference here on Thursday. He said government would ensure strict fiscal discipline and transparency to put the country on the path of economic stability.
Defending his move not to increase the salaries of civil servants, the finance minister said that government has granted an allowance three months back and it could not afford to enhance their salaries after every three months. However, he assured that the employees would definitely be compensated in the next budget.
Dar informed that Pakistan and IMF would hold negotiations under post programme monitoring from June 19 in Islamabad. Loans would be taken to repay the loans taken by the previous government, he said, giving an assurance that these will not be taken on dictated terms but on ‘our own terms’ keeping in view the national interests.
Ishaq Dar was of the view that austerity measures would save Rs40 billion, as prime minister reduced the expenditure of PM’s House and his Office by 45 percent and cut the all expenditures – other than debt servicing, defence, pay and grants – by 30 percent. The government has fixed revenue collection target at Rs2475 billion that is 23 percent higher than the collection of outgoing year. The government has removed the discretionary grants of the federal ministries and autonomous departments, except national security agencies.
The finance minister said that the government was going to tax Haj operators instead of pilgrims. Similarly, he defended to increase the sales tax rate by saying, “We have marginally increased the sales tax that is not for the first time, as previous government also raised the said tax.” He said we have tried not to put burden on the people. He said reforms will be introduced in the FBR and leakages will be stopped to enhance revenue collections.
Dar said that ratio of income tax has been increased only on those having more than seven million rupees annual income. The number of such people is 3,114. The minister said that the number of people living below the poverty line has doubled during the last five years. The revenue to be collected from the increase in income tax would be spent on the welfare of the poor people. Therefore, the government has decided to increase the income support programme to Rs1,200 from 1,000.
Talking about the economic growth, the finance minister said that government has planned to increase GDP growth to 4.4 percent in next financial year 2013-2014 and 7 percent by 2015-2016. He said inflation level would be at single digit while investment to GDP will be increased to 15 percent during the next fiscal year. This level will be increased by 20 percent during the next three years. Fiscal deficit will be reduced to 6.3 in the next year and to four percent by 2016.
Dar said that debts would be decreased to the 61.5 percent of GDP during the next financial year from 63.3 percent of the GDP. The debt to GDP would be further declined to 55.2 percent of the GDP in medium term. He said that per capita income stood at 1,356 dollar and the government had set target of 100-dollar increase in the per capita income for the next year.
The finance minister said the government had set a target to achieve 15 billion dollar remittances during 2013-14 that was recorded at 14 billion dollar during the outgoing fiscal year. The minister added that government has also set target of 20 billion dollar remittances for June 2016. Dar said that for the promotion of corporatisation, the maximum corporate tax rate would be reduced by 1 % annually.
The Finance Minister said the government would ensure a transparent auction of 3-G licences to fetch about $1,200 million. “We will also strive to secure the payment of $800 million from the Etisalat that is due for more than 5 years,” he added. The minister said all-out efforts would be made to improve the economic situation of Balochistan, besides addressing its other issues.
He said that under the Prime Minister’s Youth Skills Development Programme, 25,000 young persons up to the age of 25 and with minimum qualification of middle, would be imparted training in a number of trades. Similarly loans ranging from Rs 100,000 to Rs 2,000,000, at a mark-up cost of 8% to be borne by the government, would be made available through the banking system.
The minister said in place of Peoples Works Programme-II, Tameer-e-Watan programme would be introduced. Dar said the economy had been put on the right direction and international community had given positive signals on the presentation of budget. He said the domestic stock market’s response was also positive, indicating the budget was business-friendly that restored confidence of business community. (Courtesy: Nation)