Finance minister tells Senate committee attempts being made to push country towards default n Claims IMF delaying loan revival plan to satisfy political agenda n It seems Fund will hold talks after turning Pakistan into Sri Lanka: Ishaq Dar.

 

ISLAMABAD  -  Federal Minister for Finance Ishaq Dar Thursday revealed that the International Monetary Fund (IMF) is not revving loan programme due to geopolitics which is happening against Pa­kistan to default.

Briefing the Senate Stand­ing Committee on Finance, Ish­aq Dar said attempts are being made to push the country to­wards default. He said that IMF wants Pakistan to become Sri Lanka before reviving its loan programme. "It seems like talks will be held after turning Paki­stan into Sri Lanka,” he said and added that Pakistan is a sover­eign country and the govern­ment can’t accept everything the IMF says. 

He said a sovereign country, Pakistan, should have the right to give some tax concessions. “The IMF wants us not to give tax concessions in any sector.”

He assured that Pakistan would not default as even Man­aging Director of the IMF has also made such statement. He has also assured that the gov­ernment would all due pay­ments on time and also ruled out the possibility of debt re­structuring with Paris club and multilateral. He said that the government would manage all external payments.

Finance Minister criticised the amendments made to the State Bank of Pakistan Act during the previous government’s ten­ure, he said amendments led to “a state within a state”. “The amendments made to the State Bank Act are unsustainable,” he further added. Changes were made in the SBP’s governing laws but they are not complete yet. He said that SBP belongs to Pakistan not to any Interna­tional Financial Institutions. He informed that the gov­ernment is contemplating to withdraw ban on the imports after June 2023. He said that the country is current liquid­ity crunch but it has assets of billions of dollars. In last four years, Pakistan’s external debt has surged to $100 bil­lion from $70 billion.

He assured the committee that the government would achieve the tax collection tar­get of Rs9.2trillion in next fiscal year as it knows how much tax it needs to collect and form where the revenue can be generated. “This tar­get is apart from tax exemp­tion. No budget is coming from tax-exempt sectors. We will take the IMF into confi­dence on this,” he said.

The finance minister also briefed the committee about the package given to the IT sector. “We want to give em­ployment opportunities to the youth through develop­ment in the IT sector,” the fed­eral minister said. He added that the government has set a target of achieving $15 bil­lion in IT exports in the next five years. “IT exports were $2.5 billion this year which is very less. We want to take IT exports to $4.5 billion in the coming year,” he added.

Senator Saleem Mandvi­walla inquired about the prospects of continuity of IMF plan. Senator Ishaq Dar termed the IMF 6 Billion Dol­lar guarantee demand illegal and stated that IMF is delay­ing plan to satisfy his politi­cal agenda. Although, the de­mands have been fulfilled by providing 3 Billion Dollar guarantee from UAE and Sau­di Arabia and the remaining 3 Billion Dollar is being guar­anteed by World Bank and ADB, he added. Senator Ishaq Dar categorically stated that Annual Budget has been pre­pared without IMF consul­tation and IMF reservations on the current budget could be justified. He claimed that IT, Agriculture and SME sec­tors are ‘Drivers of Growth’ and exemption given to these sectors were inevitable for the economic growth of the country, which is current­ly stands at 0.29%. Federal Minister reiterated that Paki­stan is asset rich country and would survive without IMF support. 

The Senate Standing Com­mittee on Finance and Reve­nue, chaired by Senator Sal­eem Mandviwalla, was held to consider and finalize the recommendations on the Fi­nance Bill, 2023.

Senator Engr Rukhsana Zuberi suggested that Free­lancers should be given ex­pemtion in retaining their revenue. Federal Minister for Finance and Revenue Sen­ator Muhammad Ishaq Dar stated that Annual Budget al­lowed freelancers to retain 35 p.c. of their revenue. Be­sides, freelancers earning 2000 Dollars are exempted from sales tax and they could also procured duty free hard­ware, he added. He main­tained that in the current fiscal year, a return of 2.5 Bil­lion Dollar is expected from IT industry and the number would reach 4.5 Billion Dol­lar by next year and the ex­emptions have been given by keeping in view, the potential growth of IT industry. Sena­tor Taj Haider proposed that the tariff on Tennis, Badmin­ton racket and other sports equipment should be expect­ed. Federal Minister for Rev­enue and Finance stated that fixation of tariff is preroga­tive of Commerce Ministry and the recommendation has been forwarded.

Senator Zeeshan Khanzada highlighted the issues con­fronted by the industry in LC’s opening and inquired as to what steps have been tak­en by the ministry for the re­pression of illegal border trade. Senator Muhammad Ishaq Dar reiterated that the Import restrictions were im­posed to curb the massive in­flows. He stated that the ex­ternal debt of the country has been reached from 70 Billion Dollars to 100 Billion Dollars in PTI regime which was clearly an outcome of fi­nancial indiscipline. He re­marked that expenditure bill should be made by keeping in view the external debt. Federal Minister for Reve­nue maintained that import restrictions would be up­lifted by 30th June. As far as prevention of Illegal border trade is concerned, Senator Ishaq Dar stated that coordi­nation between Intelligence agencies and FBR occupies vital importance and delib­erations with concerned au­thorities have also been con­ducted in this regard.

Moreover, Senator Kaudar Babar highlighted the eco­nomic potential of Gwadar and demanded that Gwadar should be declared as Spe­cial Economic District and ex­emptions should be given to locals on the same footing as it has been provided to Chi­nese. Senator Ishaq Dar stat­ed that the ministry will de­liberate on the matter and informed the standing com­mittee afterwards.

Senator Irfan Siddiqui ap­prised that the employees of Radio Pakistan have not been paid from the past three months and proposed 5 p.c. radio fees in the annual ve­hicle registration fee to curb the financial crunch of Ra­dio Pakistan. He also suggest­ed that PTV Fee which is be­ing charged to consumers in electricity bills should be en­hanced from 35 to 50 rupees and the additional amount should be given to radio Pa­kistan. The Senate committee acknowledges the proposal and referred to Finance Min­istry for consideration. How­ever, Senator Saadia Abbasi rejected the proposal. In ad­dition to that, Senator Mian Abdul Qadir informed that fi­nal tax of 7.5 p.c. on construc­tion companies has been changed into initial tax with an increase of 1 p c. Besides that, an assessment will also be conducted on payments, he added. Senator Mian Ab­dul Qadir suggested that the current 8.5 p.c. tax should be charged as final tax not as an initial tax. The Senate Com­mittee directed the minis­try to look into matter. Fur­thermore, representatives of Auto Spare Parts and FATA steel mills association have also submitted their propos­als for reduction in sales tax­es and custom duty. The Sen­ate Committee forwarded the proposals to Finance Minis­try for consideration.