| Says US, EU are main destinations of Pakistani exports

 ISLAMABAD   -   Finance Minister Shaukat Tarin on Wednesday said that the International Monetary Fund (IMF) should not have any objection on the Prime Minister Imran Khan’s recent relief package, as it would neither increase budget deficit nor would be financed through borrowing.

The government would finance the PM’s relief package through increase in tax collection, dividend from shareholdings of state owned enterprises, funds would be diverted from Ehsaas Programme and cut in Public Sector Development Programme (PSDP), Tarin said while addressing a press conference here.

He said that IMF has nothing to do with our political situation. “However, we would ask them to soften their conditions as people have already taken to the streets,” he said and added that the talks would conclude successfully, as Pakistan had met all IMF’s targets by December 2021.

The finance minister said that Pakistan would convince IMF that the recent tax amnesty scheme for industrial sector is a targeted scheme as like the government had announced for the construction sector.

To a question, Tarin said the prime minister should not have slammed the EU envoys in public. He said that United States and European Union are two top destinations of Pakistan’s exports. He said that Pakistan had held discussion with China on strategic issues. Pakistan had asked Chinese to invest in Special Economic Zones, which could increase the country’s exports. The government had also sought Chinese assistance in agriculture, information technology, and improving trade imbalance between two countries.

He admitted that there could be a primary budget deficit of 0.5 percent of the gross domestic product (GDP) due to increase in expenditures. He said that tax collection would increase to Rs6.1 trillion during current fiscal year from projected Rs5.9 trillion. The tax collection could have touch Rs7 trillion if we do not face the hit of reduction in General Sales Tax (GST) on oil prices. He informed that the government is expecting GDP growth in range of 4.5 to 5 percent during current fiscal year. He said that there would be bumper wheat crop this year.

Shaukat Tarin said that government has sufficient foreign exchange reserves of $17.5 billion, which would cover four months imports.

To another query regarding the FATF’s decision to keep Pakistan on the grey-list, he said it is a political decision by the anti-money laundering watchdog. “Pakistan has complied with 26 of the 27 conditions,” he said.  He informed the media that government would provide subsidy of Rs104 billion on keeping oil prices unchanged in next four months (by June). The government has reduced the petroleum levy and brought the GST to zero percent on oil products to protect people from hike in oil prices in international market.

The government is bearing Rs78 billion fortnightly loss through budgeted reduction in petroleum levy. The estimated budget loss in the next 4 months would be Rs250-300 billion just from petroleum relief with the assumption of $100/bbl weighted average international price, he added. Talking about the relief in electricity prices, the finance minister said that the government would provide subsidy of Rs136 billion on power prices. He explained that power consumers using 700 units per month will be provided with subsidy of Rs5 per unit under the PM’s relief programme.

Tarin said that the government has introduced industrial package for bringing investment in new industrial units and expansion and modernization of existing units.

Talking about the economic situation, he said that trade deficit has narrowed to $3.1 billion in February this year, which is pre Covid-19 figure. He informed that the current account deficit would be only $500 to $600 million if we include $2.5 billion foreign remittances.