Aurangzeb hints at rationalisation of govt spending

KAMALIA: Minister for Finance and Revenue Mohammad Aurangzeb Sunday termed the Pakistan Agricultural Storage and Services Corporation (Passco) the most corrupt department and hinted at its abolition.

Addressing a press conference here, said the strategic reserves of wheat were quite crucial and there was a need to think whether these should be handled by the public or private sector. “There ais a need to hand maximum things over to the private sector provided there was a strong regulator,” the minister said.

Aurangzeb said he reviewed the performance of different research institutions in the public sector and found that they had not achieved any results. He said 80 to 90 percent of the research institutions funds went towards payment of salaries and all these departments must be wound up. He said the state-owned enterprises (SOEs) would be either privatised or overhauled through the public-private partnership. The electricity tariff would be brought down. He also hinted at reviewing the Higher Education Commission (HEC) expenditures.

He said there was a current expenditure of Rs60 billion in the HEC as well as Rs60 billion on the development side but there was a need to analyse the caliber of students produced by the universities.

The minister said he did not want to say anything about politics but there was a need to stand united for the sake of the country. “For the sake of country, everyone will have to sit together as far as the Charter of the Economy is concerned,” he said.

In the year 2025, he said the foundation of macroeconomic stability would be moved towards growth trajectory. “Inflation has receded and there are expectations that the policy rate will come down to the single digit so macroeconomic stability has built up the foundation to achieve growth on sustained basis,” he said.

“The IMF program is generally known as the stabilization program which is true but there are two areas which rely upon our efforts to grow such as agriculture and information technology (IT),” he said.

The minister said the government would not sit in Islamabad by holding a Darbar (public court) on the eve of the next budget, as they would hold consultations with the business community on their doorsteps.

“Businessmen used to come to Islamabad for three months on the eve of the budget bringing the country to a standstill, but this time we will visit different cities to get input from the business class,” Aurangzeb continued.

He said macroeconomic stability had been achieved and it was confirmed by independent sources, as inflation and policy rate had receded. “The foreign exchange reserves have improved and the currency remains stable,” he said.

“The economic wheel of the country has started moving. So, I would be the last person to say whatever we had promised has been achieved. Macroeconomic stability has built up the foundations for achieving growth on sustained basis,” he added.

The policy rate, he said, had come down, as it was not possible for businesses to secure credit at high mark-up rates, he said, adding that the cement and fertilizer consumption had increased.

The auto sector sales, he said, had picked up, as no one could borrow at the over 22 percent rate but it made a difference when the banks offered 8 percent rate for buying auto products.

He said when the country’s growth exceeded 4 percent, it led to imbalance because the reliance was on import-led growth so the foreign exchange reserves started depleting. “There is no magic wand to fix everything instantly. We need to move towards sustainable economic stability”.

He said rice exports would exceed $5 billion during the current fiscal year against $4 billion last fiscal year. The remittances would cross $35 billion during the current fiscal year against $30.2 billion in the last fiscal year. The external account will be at a very good place, he hoped.

On the taxation side, he said every segment would have to contribute, as the tax to GDP ratio stood at 9 to 10 percent which needed to be jacked up to 13.5 percent. The country cannot be run through charities as school or health, he added.

He said the tax machinery’s integrity would be ensured from Grade 16 to 22; it was reviewed at higher grades from 21 to 22 but now it would be ensured up to Grade 16.

The process of tax payment, he said, would be simplified. Technology would be utilized as all kinds of data is available with Nadra and FBR and the consumption pattern could be gauged with the help of data and available information.

Citing an example, the minister said his data concerning traveling, possession of houses, vehicles etc was available with the tax authorities. Every single segment will have to pay due taxes as our tax-to-GDP ratio stands at 9 percent, while the neighbouring country’s stands at 18 percent, he added.

He said that it was stated that the department of tax collection was corrupt which was correct, as first of all there was a need for acknowledgment to rectify things. “If the mistake is not admitted, how would it be fixed and rectified?” he questioned and replied that they were being rectified through people, process and technology.

On energy, he said that the tariff would be brought down and the element of corruption, harassment and leakage would be abolished.

The finance minister said the economic reform programme under Manmohan Singh in India started at the same time Nawaz Sharif started his economic reforms in Pakistan when he was the prime minister. Suggesting that the economic reforms in Pakistan were disrupted and those in India continued, he asked where India stood today in comparison to Pakistan. He remarked that India’s progress showed that it was imperative to stay with the reform agenda and focus on result-oriented agenda.

APP adds: Aurangzeb said the energy sector was being reformed and tariff would be reduced further and performance of distribution companies would be improved. He assured farmers of his full support in addressing their issues. The government plans to provide them with agricultural loans through banks to enable them to improve the yield. He said it was the need of the hour to privatise critical sectors to stimulate growth and reduce the financial burden on the government.

The finance minister said everyone will have to pay tax. He said the tax authority was being reformed and the government did not want to put any additional burden on the salaried class.

He said the elite class, enjoying a luxurious lifestyle, would be brought into the tax net, as more than 190,000 people were evading tax despite having more than one house and vehicles. Responding to a question, he made a clear statement that all sugar mills violating the government’s instructions for clearing dues of the farming community would be sealed.