Govt ready to negotiate charter of economy with opposition: Tarin

ISLAMABAD: Federal Minister for Finance Shaukat Tarin said that Pakistan would have to demonstrate the practical success of its adopted path on revenue generation and curtailing circular debt, following which the IMF might club sixth and seventh reviews together in September 2021. Tarin also said he is prepared to negotiate charter of economy with the opposition. He was briefing the NA Standing Committee on Finance which held its meeting at the Parliament House on Thursday. The finance minister also announced to re-write powers of arresting and prosecution on concealment of income under section 203-A and B into Finance Bill 2021-22, saying that the powers of arresting any willful tax defaulters would rest with him and Chairman FBR instead of Assistant Commissioner of Inland Revenue (IR) officer. Tarin said the FBR has the data of 7.2 mn tax evaders, who would be sent notices through third party rather than the FBR.

“Our negotiations with the IMF are going well and we have talked with their high-ups yesterday. We presented our alternate plan and they accepted that it possessed weightage. Now we will have to demonstrate that our alternate plan on revenue generation and curtailing circular debt is practical and is yielding positive results in the next few months. The IMF will club sixth and seventh reviews in September 2021” the federal minister briefed the standing committee on Finance presided over by Faiz Ahmed Kamoka.

The minister said that he was defying the IMF demands as the Fund staff was asking for total elimination of all tax exemptions. He said that there would be a risk of Rs 400 billion if the IM program is not revived. However, he said that the government decided to go to the international market to generate sufficient foreign funding through Eurobond, Sukuk bond, green bond and Panda bond in the next fiscal year.

Ali Pervez Malik MNA belonging to PMLN asked about the IMF programme and gross financing requirements to ascertain the importance of the Fund funded program, the minister replied that the IMF had asked for imposing an additional Rs 150 billion personal Income Tax (PIT) but the government argued that instead of burdening existing taxpayers the broadening of the tax base would help achieve the desired revenue generation. On electricity tariff, he said that the IMF asked for raising tariff in June by 1.39 units and in totality by Rs 4.95 per unit so they were pressing Islamabad to jack up power tariff from Rs13 to Rs14 per unit to Rs18-19 per unit or 25 percent in one go. The IMF, he said, was providing us a solution on account of capacity payments and collection to curtail increasing circular debt but their prescription would result in increasing power tariff. In our alternative plan, the minister said that the government would fix structural defects through innovative formulas so instead of raising tariffs the government would check and prevent the increase in circular debt. “Over our alternate plans, the IMF emphasized upon continuation of talks to prove that our adopted strategy is practical and is yielding positive results on account of revenue generation and curtailing of circular debt,” Tarin added.

When Ali Pervez Malik further asked about gross financing requirements and inquired whether the figure of $25 billion was correct, the minister replied that he did not have official figures about external gross financing requirements but the government has plans to generate sufficient external inflows through raising of different international bonds.

Malik also pointed out that the provinces did not give a revenue surplus of Rs570 billion to reduce the budget deficit as envisaged in the budget for 2021-22, the minister conceded and said that there was a gap on this front.

Tarin said the Center was utilizing Rs175 billion on meeting expenditures when the NFC was done but now this amount had ballooned to Rs550 to Rs600 billion per annum so the provinces should take its responsibility in true letter and spirit. He said the government has two options on that account.

He said, "We would be convening an NFC meeting and the province will be told to bear the expenditures on para military forces and Ehsas Program after which their revenue surplus related commitment would be withdrawn". He said the provinces had made a written commitment for giving a revenue surplus of Rs 570 billion but if they did not implement the agreement then the Center could deduct the desired amount. He said following the increase in the share of NFC, the provinces jacked up the salaries of employees instead of spending that amount on health and education.

The finance minister informed the NA standing committee on finance that he is ready to negotiate the charter of economy with the opposition. He also said that the FBR has the data of 7.2m tax evaders, who would be sent notices through third parties rather than the FBR. He said that the government would provide clean lending to SMEs to the tune of Rs 100 billion as the government would provide subsidies to keep markup on the lower side and allocated Rs 12 billion for this purpose in the budget. To another question raised by MNA Ramesh Kumar, the minister replied that there would be no change in the FBR team in next fiscal so that they could implement the budget and deliver on envisaged targets.