Govt takes steps to avoid new IMF loan programme: minister

KARACHI: The government has taken several measures in the budget 2018/19, including curtailing budget deficit and increase in exports, to avoid any new IMF loan programme, Finance Minister Miftah Ismail said.

Addressing the post-budget seminar, organised by the Institute of Chartered Accountants of Pakistan (ICAP) on Monday night, he said, the government has given its best in the budget. “And now it is the duty of the new government to maintain economic growth,” he said.

Ismail said that as a finance minister it was his duty to ensure economic growth, besides narrowing budget deficit. Growth target for the next fiscal year has been set at 6.2 percent, he said, adding that the tax rates have been reduced. Five percent tax has been proposed under the tax amnesty scheme for whitening the black money.

The higher rate of tax attracts more revenue, but it cannot yield results in the long-term, the finance minister said, adding that rich people are buying properties and motor vehicles, but not paying taxes and avoiding registration. Now they had no other option but to come into the tax net, he said.

The government is making all-out efforts to broaden the tax base, the finance minister said, adding that a non-filer cannot purchase immovable property valuing over Rs4 million.

He expressed the hope that the Federal Board of Revenue (FBR) will collect around Rs4,000 billion during the outgoing fiscal year. The revenue authority has been assigned collection target of Rs4,565 billion, a 11 percent higher than the present collection target, he said.

In the budget, the government has reduced the Customs duties on many items and levied or enhanced the duties on several other items.

The finance minister said the salaried individuals are paying huge sum as income tax. “Therefore, the salaried individuals have been allowed tax relief in the budget.”

He stressed on the need to curtail budget deficit. The federal government has reduced its expenditures, but there is no relief from the provincial governments.

The government is also taking steps to increase exports and discourage unnecessary imports. If remittances and exports increase 20 percent than the higher imports will not be a problem, he added.

Ismail said that the GDP growth should be brought at 10 percent for poverty reduction and employment generation.

Commenting on the rupee devaluation, he said, lower dollar value would be like supporting import of expensive cars and luxury items. He admitted that maintaining exchange rate in the past was a mistake.

Talking about the outgoing fiscal year’s performance, he said, agriculture sector posted 3.8 percent growth, which was at 10-year high. Flour prices in Pakistan are higher than other regional countries, but wheat support price is at the lowest, he said, and lamented the cotton output, saying, in the past, Pakistan and India were producing equal amount of cotton bales, but Pakistan is still producing around 12 million bales, while India is producing 26 million bales.

The revenue collection has increased 100 percent during the last five years, the finance minister said, adding that a very few people in the country are paying taxes. The government is not providing any relief to tax evaders. However, there is a need to bring those evaders into the tax net, he said.

“The amnesty is not for tax evaders, but for those who are negligent of their duty to pay taxes,” he said.

Ismail assured the chartered accountants of rectifying the mistakes pointed out in the Finance Bill 2018 and Federal Budget 2018/19. Flaws in the budget documents would be rectified in the next two weeks, he added.