FY22, FY23: Economic team unveils gameplan

The government on Thursday said the revenue collection would be increased by 20 percent every year to take the total tax collection to Rs7 trillion over the next two years. Moreover, it would take all the needed steps to increase the development spending by 38 percent to put the country on suitable and inclusive growth.

At a hurriedly-convened press conference ostensibly in response to a (PML-N) pre-budget seminar, Finance Minister Shauakt Tarin, along with other members of his economic team, Minister of Energy Hammad Azhar and Minister for Industries and Production Khusro Bakhtiar, said the present government had no option but to accept the harsh conditionalites –laden International Monetary Fund (IMF) programme to deal with the economic morass left behind by the previous government in 2018.

The minister said the previous government’s debt-driven growth artificially managed exchange rate, widened the current account deficit to an unbearable level of $20 billion, and the present government was “compelled” to take the IMF programme for payment of due loans.

“Even the PML-N members privately concede that the economy was badly mismanaged by their finance minister Ishaq Dar”, he said and added that “all credit goes to Prime Minister Imran Khan for saving the economy from collapse”.

Tarin further stated that despite a challenging economic situation and the Covid pandemic, the economy was now growing at four percent this year and is expected to grow five percent next fiscal year, and by six percent in subsequent fiscal year.

The finance minister said that the present government was thinking positively for the next two fiscal years and prepared short-, medium- and long-term plan for various sectors of the economy.

“We have been paying capacity payment primarily because of absence of planning in the power sector by the previous government,” the finance minister added.

Tarin said he was confident that the government would be able to increase revenue by 20 percent every year to take the total tax collection to Rs7 trillion in the next two fiscal years.

Tax collection, he said, would be increased to Rs5.8 trillion in the next fiscal year from Rs4.7 this fiscal year, and the government would increase tax base through use of technology.

Nominal growth – inflation and GDP – would be over 13 percent and the remaining would be made up by bringing retail sector into the tax net, the minister added.

Additionally, he said that some exemptions would also be withdrawn in the budget.

The finance minister added that public-sector development programme would be increased by 38 percent and growth would be higher, inclusive and sustainable by 2022-23.

Whereas restructuring and privatisation process would be initiated, the minister added.

In order to protect the most vulnerable, the government would also adopt bottom-up approach, Tarin said.

Replying to a question, the finance minister said the National Tariff Commission was working with the Federal Board of Revenue (FBR).

He said that debt commission report would also be shared with media as soon as it is received.

The finance minister said that increase in discount rate and devaluation have contributed to the rise in debt servicing and debt, adding that the Fund was unfair with Pakistan in terms of discount rate.

He said that increase in Rs1,500 billion in debt servicing was due to the PML-N government’s policies.

Replying to another question, Tarin said the government would give an alternate plan to the International Monetary Fund (IMF) with regard to circular debt, adding that when real economy contracts poverty increases.

The minister said the incumbent government was collecting “very nominal” PDL on petroleum levy, while it was being collected at Rs30 per litre by the previous government.

Minister for Energy Hammad Azhar said that voices were being raised even during the PML-N government that the country has to go to the IMF because the same team that was criticising the present government at the seminar brought the country to the verge of default.

He also referred to former finance minister Dr Hafeez Pasha’s book, say that the author had noted that poverty increased during the previous government’s.