No new tax on agriculture, construction, says Ishaq Dar

ISLAMABAD: Finance Minister Ishaq Dar Friday brushed aside reports that the government was going to impose new taxes on agriculture, construction and real estate sectors to meet the IMF’s conditions. 

“Making you (Speaker) and the members sitting in the House as witness, I want to assure that not a single new tax would be imposed on agriculture, construction and real estate sector,” Dar said.

He pointed out that the government had taken all the hard decisions and endured much and he himself had announced all the fiscal measures in his budget while winding up his speech in the National Assembly last month which were required to meeting the IMF conditions.

“We diligently met all prior conditions and announced fiscal measures and not a single new tax in these sectors would be imposed,” he added.

Dar said it had been an effort of the government that as a result of its fiscal measures, the storm of inflation and price hike should stop now.

He also offered his readiness to provide detailed information on these specific issues to anyone seeking clarification.

“I am confidentially mentioning here that according to the sources of State Bank of Pakistan (SBP) the inflation which previously was 38 percent and then reduced to 29 percent would further come down to seven percent in the next two years,” the minister said.

He also laid three documents before the House related to the stand-by-agreement reached with the IMF.

Attributing the country’s economic hardships to the former PTI government’s backtracking on the commitments, Dar proudly said with the government’s efforts, Pakistan had successfully reached $3 billion agreement with the IMF.

As a result, the State Bank of Pakistan received the first tranche of $1.2 billion to stabilize the economy.

Speaking on the current foreign exchange reserves, he informed the House that the reserves had reached their highest position since October 2022.

The total liquid foreign reserves were reported to be US$14,065.3 million, with the central bank holding $8,727.2 million, thanks to inflows from Saudi Arabia, the United Arab Emirates (UAE), and the IMF.

The central bank received $2.0 billion from Saudi Arabia, following $1.2 billion from the IMF, and $1.0 billion from the UAE, contributing to the net foreign reserves held by the commercial banks at US$5,338.1 million.

The finance minister reassured the public that the government had made all due payments in accordance with the international agreements, further demonstrating its commitment to meeting obligations on time.

“We have already made it clear that we have the reserves to make international payments for the month of May and June 30,” he said.

Dar shared that the IMF agreement would be made available on the finance ministry website for public information.

Speaking on the floor of the House, Minister for Aviation Khawaja Saad Rafique said the government would go ahead with outsourcing three major international airports, starting with the Islamabad International Airport, for 15 years to improve its operational activities. Responding to a calling attention notice Maulana Abdul Akbar Chitrali of Jamaat-e-Islami (JI) about the outsourcing of the airport, the minister said no pressure or blackmail would be tolerated while outsourcing airports and restructuring of the Pakistan International Airlines (PIA).

He clarified that the move to outsource the airports did not mean privatization rather it was meant to bring in proficient operators to enhance the airport operations on pattern of the world. Saad emphasized that an open competitive bidding would be ensured, allowing the best bidder to operate the airport.

The process, he said will be profit-oriented, ultimately benefiting the national exchequer.

The International Finance Corporation will serve as the consultant, and already 12-13 companies have shown interest in participating in the bidding process, he added.

The minister assured that the process would be transparent and adhere to all rules and regulations. However, the minister clarified that the runway and navigation operations would not be included in the outsourcing process.

Highlighting the success of outsourced airports in other countries like India and Turkiye, Saad said even the Madina Airport had been efficiently outsourced to deliver enhanced services.

The minister also stressed the need for restructuring the PIA to address its substantial deficit, which had reached Rs80 billion this year and was projected to increase to Rs259 billion by 2030 if not dealt with appropriately.

He asserted that no employees would be laid off and all existing staff would retain their job security and privileges. However, he also mentioned that best practices would be implemented to ensure facilities at airports are efficiently managed.

Regarding the future plans for PIA, Saad informed the House that the total liability of PIA stood at Rs742 billion, with only 27-28 planes currently operational.

The minister said there was also a plan to restore flights to the UK within three months, followed by the resumption of flights to the US and Europe.

He warned that if immediate reforms were not undertaken, the operation of PIA would have to stop in the next one and a half years saying a statement from the former federal minister for aviation had created problems for the PIA causing a loss of Rs70 billion.