If any consortium comes forward & guarantees to collect Rs 12,000 biln tax in next one year, he will send all employees of FBR on one year leave: Ishaq Dar
Says we will make the payment to IMF, World Bank & other such multilateral institutions when it becomes due
Says federal budget 2023-24 is not a traditional one as it focuses on growth to improve macroeconomic indicators & create job opportunities
ISLAMABAD ( Web News )
Minister for Finance and Revenue Senator Mohammad Ishaq Dar has said that if any consortium comes forward and guarantees to collect Rs 12,000 billion tax in next one year, he will send all the employees of the Federal Board of Revenue (FBR) on one year leave.
Addressing the Post-Budget news briefing in Islamabad on Saturday, Ishaq Dar said that the government has allocated budget for Election Commission of Pakistan (ECP) while deducting Rs5 billion already paid for holding the next general elections. He said that the elections will be conducted by the ECP and not by him. He said that if the leaders of the coalition parties talked about delaying the elections then it is not unconstitutional thing.
Replying a question, Ishaq Dar said that we will not go for the rescheduling of the multilateral debt and we will make the payment when timeline become due, adding that it is not dignified way to go and tell them we can not pay. He said that there is no plan to go to the multilateral development institutions requesting them to reschedule our debt, adding that we will make the payment to International Monetary Fund (IMF), World Bank and other such multilateral institutions when it becomes due. Ishaq Dar said that there is no problem in payment of the internal debt.
Ishaq Dar said that the federal budget 2023-24 is not a traditional one as it focuses on growth to improve macroeconomic indicators and create job opportunities. Ishaq Dar said the budget envisages several measures for the sectors of agriculture, Small and Medium Enterprises, Information Technology to achieve the objective of economic growth.
The Finance Minister said the growth target of 3.5 percent set for the next fiscal year is easily achievable. He said the IMF expects 3.5 percent, while Bloomberg and Fitch both project it at four percent, which means that we have set a modest and doable target. He said the government has taken the PSDP to the historic high of 1150 billion rupees and the transparent implementation of the plan will help achieve the growth target set for the next fiscal year.
Talking about macroeconomic indicators, Ishaq Dar said inflation is projecting at 21 percent, FBR revenue collection to GDP 8.7 percent, overall deficit 6.54 percent, primary balance 0.4 percent and public debt to GDP 66.5 percent. He said the previous PML-N government had left this figure at 63 percent, which rose to 74 percent during the last PTI-led regime. He said debt to GDP means a lot and a core indicator and we are pitching this figure at 66.5 percent, while GDP is expected at 105.8 trillion rupees.
The Finance Minister said the government is preparing a scheme of concessional loans for agro-based SMEs and sufficient funds for this initiative have been allocated in the budget. He said we also plan to establish a special zone for the IT sector.
Ishaq Dar said no new taxation measures have been taken in the new budget. He said the government has no intention to increase the rate of petroleum development levy. He also clarified that sales tax has not been levied on the packaged milk. He said the sales tax on import of edible oil has not been abolished. He said that the recent reduction in the prices of edible oil is the result of international trends.
The Finance Minister said the government has allocated 35 billion rupees for in budget for provision of targeted subsidy on essential items, including ghee and flour through Utility Stores. He said the budget of BISP has massively been enhanced to 450 billion rupees to support segments of society.
Ishaq Dar said the Sharia Complaint products under National Savings will be launched from next month.
The Minister once again categorically stated that Pakistan will not default, stressing that the country has ensured payment of external liabilities in the past and will do so in future as well. He was confident that the European countries will extend the GSP-Plus statues of Pakistan. To a question, he made it clear that Pakistan has no plan go for rescheduling of Paris Club or multilateral debt. He once again said that we will make all the payments on time. Ishaq Dar said that two committees are being constituted in the FBR to address anomalies if any in the budget. He said these committees will take effect from Monday. He also assured that due consideration will be given to the recommendations of the Senate as well as the standing committees on Finance of the parliament.
Ishaq Dar said that after the budget process, the government is considering talking to bilateral partners for debt rescheduling but stressed that the relief will not include “haircuts or write-offs” and that multilateral creditors will be paid on time.
“As far as Paris Club rescheduling, we have no such plan on our menu. We will not go for rescheduling multilateral debt. We will make the payments on time and when they become due. I don’t think it is a dignified way to go and tell them that we cannot pay. That means you’re declaring yourself that you are not in a position [to pay],” he told a post-budget press conference in Islamabad.
Talking about bilateral debt at the presser, Ishaq Dar clarified that while requesting a debt restructuring or write-off was not on the table, negotiations could be pursued for extending the repayment period. This option existed and could be explored after the budget process, he added.
He reassured that the current circumstances, such as the impact of Covid-19 and natural disasters, did not necessitate an unusual approach. “Backloading the principal and focusing on debt servicing could be considered for bilateral debt rescheduling.”
Ishaq Dar insisted that there were no plans to approach multilateral or development institutions to request debt rescheduling, emphasising Pakistan’s commitment to meeting its obligations.
The minister emphasised that there was no requirement for rescheduling domestic debt, expressing concerns about its impact on the government’s ability to function effectively.
Ishaq Dar pointed out that the previous government had revoked the practice through amendments, which resulted in commercial banks benefiting and an increase in the policy rate. He stressed the need to review this and consider corrective actions.
The minister stated that he did not believe Pakistan had any issues concerning domestic debt, highlighting the country’s status as a sovereign nation. Regarding foreign debt, he emphasised the importance of using external resources within affordable limits and projecting future payments conservatively.
Ishaq Dar expressed that if this approach had been implemented years ago, Pakistan would not have faced its current challenges. He deemed it “stupidity” to reschedule domestic debt at this time and hoped that the right time for such a move may come.
He also said that Pakistan had faced a “deep and steep” economic vulnerability, which it had successfully overcome, resulting in a halt to “any further decline”. He underlined the government’s aim to reverse all economic losses, adding “our first objective is to go back to achieve 2017 economic indicators.”
He insisted that the proper and transparent implementation of the PSDP would facilitate the attainment of a 3.5 per cent growth rate with ease. The minister acknowledged the deep and steep vulnerability faced by the country, but stated that efforts had been made to prevent further decline.
He emphasised that it should be a national goal to steer Pakistan towards the path of development. The minister shared the government’s aim to bring about an agricultural revolution, underlining that the country possessed significant untapped potential in this sector.
Isahq Dar highlighted that debt servicing constitutes one of the largest portions of the current year’s budget. He said efforts would be made to reduce this burden and reverse the prevailing trend.
Ishaq Dar emphasised the importance of starting somewhere, stating that with economic growth, positive changes will follow. He highlighted that employment opportunities would increase, leading to the correction of macroeconomic indicators, a reduction in inflation, and the creation of more jobs. Consequently, the policy interest rate would also decrease, he added.
The minister stated that there was a customary practice of forming two committees within the FBR — one for business-related issues and the other for technical matters.
He said that the FBR chairman will obtain his approval on the matter, and the committees will be formed by Monday. “The purpose of these committees is to address any missed aspects and provide an opportunity for individuals with complaints or genuine recommendations to be heard and considered by the government.”
Ishaq Dar described the budget as being different from traditional budgets, emphasising its focus on progress linked to economic growth. The minister highlighted that ad-hoc relief measures had been announced consistently, insisting that the budget should not create an impression that something unprecedented has been done for the first time.
The minister said that there had always been a plan to make Pakistan self-sufficient and self-reliant. He firmly stated that Pakistan will not default, adding that those who talked about default had themselves made mistakes and were complicit in the economic losses incurred by the country.
The minister stated that dignified nations should take proactive measures to prevent economic defaults, noting that Pakistan had also followed the same approach.
Ishaq Dar stated that the government had prioritised the ninth and tenth review of the International Monetary Fund (IMF). He mentioned that he had requested the IMF to expedite the ninth review and initiate the 10th review, but acknowledged that the IMF was an independent body and the decision rested with them.
Nevertheless, Ishaq Dar highlighted that the country had alternative options available. He expressed the government’s efforts in working diligently towards the ninth review and expressed hope for the disbursement of payments.
Regarding subsidies, the minister acknowledged that the government had provided numerous subsidies. Specifically, he mentioned that over Rs1900 billion was allocated solely for the power sector.
He underlined the need to address and improve this sector, highlighting the efforts made thus far. He also noted that the power sector had been a significant “stumbling block” in the talks with the IMF, but it remained an area of focus.
Furthermore, he mentioned the emphasis placed on renewable green energy and clarified that no new subsidies were being introduced in this sector.
The minister addressed the circulation of another report regarding the withdrawal of edible oil, clarifying that no such withdrawal has taken place.
Later, responding to a question, the finance minister refuted the reports of a 9% tax on milk, saying that 90% of the commodity sold in the country is fresh milk. He said there were only suggestions that tax could be imposed on the packaged milk, but no implementation had been done so far.