Finance Minister Ishaq Dar has categorically made it clear that government would not withdraw withholding tax on banking transactions of non-filers at any cost but is ready to listen and solve the genuine concerns of traders through mutual consultation. Addressing a news conference at FBR house here on Wednesday, he however, announced extension of one month in payment of concessional rate of 0.3 percent withholding tax on all banking instruments on expiry of Ordinance on September 30.
The 0.3 percent tax would remain applicable till October 31, 2015. Dar said the approval in extension of one month was taken from the Economic Co-ordination Committee (ECC) of the Cabinet which was the competent forum. "One should forget that this tax would be abolished and traders must contribute their due share in taxes and we are ready to solve their problems," he said.
The Finance Minister also announced an extension in date for filing of income tax returns from September 30 to October 31 and dispelled the impression that extension in date was due to any revenue shortfall. The Minister said that the decision was taken in view of Eid holidays as well as problems faced in e-filing of returns along with requests of tax bar associations and chartered accountant firms.
Dar further stated that petrol prices would remain unchanged in the month of October 2015 against a 15 paisa reduction recommended by the Oil and Gas Regulatory Authority (Ogra). Adjustment in sales tax would be done so that the prices would be maintained at the level of September 2015. Dar said he held a meeting with the IMF officials, including Masood Khan, before the IMF Executive Board meeting to finalise the date of the 9th review. The 9th review under 6.64 billion dollar extended fund Facility (EFF) would begin in the last week of October and conclude in the first week of November 2015, he said adding that Pakistan would receive $504.8 million 9th tranche from the IMF soon. He further stated that he wants Pakistan to become strong in economic terms so that it does not need a new IMF program. Dar said that Pakistan would have to resort to crucial reforms on taxation and energy sides as the country will not need another bailout package from the IMF after expiry of existing programme. Pakistan would have to implement reforms in order to increase tax-to-GDP ratio and overcome problems of energy sector.
The Finance Minister was optimistic that Pakistan would receive outstanding Coalition Support Fund (CSF) reimbursement for end September 2014 in the next couple of days. He added that the last instalment for the End December 2014 under previous arrangement is also expected in the US fiscal year 2015-16 (October 1, 2015 to September 30 2016). Dar said that discussions are going on with US administration to strike a new arrangement for CSF support. He added that the country required Rs 190 billion for settlement of temporary displaced persons as well as for ongoing Zarb-e-Azb operation against terrorists. He said that US administration indicated $900 million to $1 billion for CSF in their own fiscal year, starting from October 1, 2015 and the due amount of December 2014 would be released from that indicated amount of $1 billion for 2015-16.
The minister said that $500 million Eurobond offered by Pakistan has been double subscribed despite volatility in the global market. He said the presence of Pakistan was important in the bond and Sukuk as well as equity market to attract foreign direct investment in the country. .He said that Pakistan was also advised by the syndicate to cancel the transaction because there was no appetite in the market. "We did not accept the advice of syndicate to increase the interest rate to 9 per cent and offer 8.25 percent interest to the investors," he added.
He said that 80 leading investors had invested in Eurobond with geographical bifurcation of 38 percent belonging to the US, 38 percent from the UK, 12 percent are from the EU and the remaining 12 percent from Asia and the Middle East. "Despite a volatile situation, Pakistan's bond was subscribed for one billion dollars but the government decided to issue a bond of $500 million for 10 years at the rate of 8.25 percent, on which the country had launched its last bond in April 2014," he added.
"This bond will reduce the public debt as rupee equivalent to the amount of $500 million will be retired by the SBP on account of domestic debt," he said. Dar said he held bilateral meetings with US Under-Secretary of State Catherine Novelli in Washington and she offered support to the ongoing efforts of government of Pakistan to rehabilitate Temporarily Displaced Persons (TDPs).
Dar said he also held meeting with Sarah Bloom Raskin, Deputy Secretary Treasury and Elizabeth Littlefield, President OPIC, and discussed with them matters of bilateral interest. He said it was decided that Pakistan-US Economic Working Group would meet in Pakistan. Dar said he also met Chairman of the Exim Bank and the bank was ready to consider financing of the 3600MW LNG project by GE.
Responding to a question about death toll of Pakistani pilgrims in the Mina stampede, he said that Ministry of Foreign Affairs and Ministry of Religious Affairs are in touch with the Saudi authorities in this regard. Pakistan has also established an emergency cell. He said that any blame-game on this tragedy would not be appropriate. To a question, he said Pakistan's fiscal deficit was 0.37 percent higher against 5 per cent target because it also includes impact of direct lending by the donors to the provinces. He added Pakistan's foreign currency reserves would cross a $20 billion mark by end of this calendar year.
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