Budget no divine text,can be altered, says Hafeez

ISLAMABAD: Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh Saturday said budget was not sacrosanct and therefore adjustments could be made during the course of year.

He also asked the provinces to make their budgets on the basis of their own estimates instead of relying on the forecasting done by the federal government.

“The budget is an aspiration for reaching any certain stage that is based on a certain assumption. It is not like a holy book that cannot be changed. It is not budget of 19th century but it’s an evolving document that can be adjusted around the clock in line with ground realities,” he said while addressing a post-budget press conference here at the P-Block.

When Sheikh was asked if it was a quarterly budget or annual budget, he replied that it was of course annual budget but it could be adjusted.

He was flanked by Minister for Information Shibli Faraz, Minister for Industries Hammad Azhar, Adviser to the PM on Commerce Abdul Razak Dawood, Secretary Finance Naveed Kamran Baloch, Chairperson FBR Nausheen Javaid and Advisor to the PM on Planning Asif Sheikh.

Dr Shaikh said he had advised the chief ministers and finance ministers of provinces that they should prepare their budgets on the basis of their own assumptions instead of relying on the forecast done by the federal government.

He set aside the argument that overestimation of FBR’s revenue collection became the basis of wrong budgetary estimates of the provinces, arguing that the provinces should make their own assessment for preparation of budget. “It is their power so they should use it instead of blaming the Center,” he added.

He said the share of federal divisible pool was crystal clear, as the provinces would get 57.5 percent and federal government 42.5 percent so the provinces could also make their assessment that how much the FBR tax collection could fetch and they should prepare their budgets on the basis of their assessments.

In his opening remarks, Shaikh said the PTI-led government had to repay debt servicing amounting to Rs5,000 billion on loans obtained by the previous government in last two years.

Building upon his narrative, Shaikh said the federal government had to repay Rs2,900 in the coming fiscal year as debt servicing obligations and after providing share to the provinces it was left with Rs2,000 billion while debt servicing head was supposed to consume so the budget would start with negative.

“There is no way out but to pay back debt obligations,” he said and added that the government made efforts to cut down its expenditures side. “If there had been no debt servicing obligations, then the Ehsaas Program for poor could have been increased 20 times,” he added. To a question about the resumption of the stalled IMF programme, Dr Shaikh said the IMF was not an institution meant to do any injustice to the people of Pakistan but they wanted that the borrowing countries should ensure financial discipline to pay back their loans.

“We are not subservient to the IMF,” he said and hoped that the completion of second review would be done within coming weeks.

On the question of increased allocation for collecting Petroleum Levy up to Rs450 billion in next fiscal year, he said the government did not have any plan to bring any change in the maximum limit of Petroleum Levy that stood at Rs30 per liter.

He said the POL prices were lower in Pakistan compared to our whole region, as it was brought down in line with PM’s vision.

He said it was a historic failure where tax to GDP ratio and savings in percentage of GDP could not be improved by every government in the past that posed a big challenge for the country.

He said the per capita income decreased as it was determined on the basis of annual income divided on total population of the country so there was need to increase total income and devise strategy to reduce population growth.

He also hinted that there would be a change in the regulatory mechanism, as it should be based upon transparency.

The prices of electricity, gas, and RLNG will be adjusted, he added.

To a question about not increasing minimum wage in the budget, he replied that it was not an appropriate time as people were worried about their jobs.

He said the SBP’s payroll scheme had benefited 0.7 million workforce mostly belonging to SMEs sector.

On the question of tax exemptions, Nausheen Javaid said that it was the first time that they shared full details about tax expenditures under the PFM law.

FBR’s Member IRS Policy Hamid Ateeq Sarwar said tax expenditures cost stood at Rs1,500 billion out of which a certain number of exemptions were withdrawn under the IMF programme in the last budget 2019-20 to the tune of Rs350 billion so the remaining cost of existing exemption stood at Rs1,115 billion.

He said the government did not withdraw tax exemption in the current budget adding that when the economy would normalize, then more tax exemptions would be abolished.

To a query, Secretary Finance Naveed Kamran Baloch replied that the non-tax revenue target was envisaged Rs1,600 billion for 2020-21.

APP adds: Speaking on the occasion, Federal Minister for Industries and Production, Hammad Azhar said special focus had been given to Small and Medium Enterprises (SMEs) in the budget 2020-21 to help job creation.

He said the government introduced a relief package for SMEs to help reduce impact of COVID-19 pandemic adding that the package would benefit around 0.8 million businesses.

Hammad said the government strived to facilitate industries so that they would not lay off their employees and regenerate new jobs.

He said the government also introduced a relief package for the construction sector, as it would also help create jobs for the common masses.

The country’s exports, he said, had witnessed considerable growth of 14 percent before Covid-19, however the pandemic hit this sector hard.

He said the government had earmarked Rs50 billion for the utility bills payment of small businesses adding that the ministry would soon unveil sugar and industrial policies.