Advisor to Prime Minister on Finance Shaukat Tarin has said the government is preparing integrated energy plan for the country. Speaking at a meeting at Karachi Chamber of Commerce and Industry (KCCI) on Saturday night, he said the government's number one agenda is to cut down inflation and fiscal deficit.
With drastic decrease in the prices of oil, edible oil, food items including pulses, steel and cement etc, the inflation would come down. Expressing concern on not passing oil prices reduction to common men, the advisor said the government will also take practical steps to ensure that the common man gets maximum relief as a result of reduction in oil prices.
The Advisor hinted at privatising Power Distributing Companies (DISCOs) going in loss, including Pakistan International Airlines, Water and Power Development Authority and Pakistan Railways. These public entities were a burden on taxpayers, he added.
Referring to IMF, he said Pakistan has the IMF as the only option as the amount was not ensured by Friends of Pakistan or other International Financial Institutions (IFIs) as Pakistan couldn't afford to default.
He admitted that all Friends of Pakistan and multilateral donors asked Islamabad to first endorse its home grown economic stabilisation plan from the IMF, then they would be in a position to help out.
The advisor said the government had to take tough decisions to keep budget deficit at 4.3 percent of the total size of the economy by June 2009. He said for that the government had to take strict administrative measures as well as unpopular decisions. He said the government would have to cut expenditures by 20 to 30 per cent.
He said those who earn above the income tax exemption limit would have to pay taxes. He reiterated that the government is looking to impose taxes on certain sectors which are likely to include real estate, agriculture and stock market. He said the government would end all other taxes gradually and increase the scope of income tax and value addition tax.
He said in next in 24 months, we must correct the imbalance we have created. He said that inflation in Pakistan is running close to 25 percent, the budget deficit is unsustainable, government borrowing from the central bank has squeezed liquidity in the banking system.
Referring to exchange rates, the advisor said that exchange rate is over valued by almost 30 percent. It has to be reduced. Market should determine exchange rates, he added He said that efforts are under way to make out agriculture, local industries and trade competitive.
Referring to Afghan Transit Trade, the advisor said that Pakistan has proposed that Afghanistan and Pakistan both should charge the same rate of duty to curb smuggling. Proposal has been prepared in this regard and it would be examined soon.
About Mumbai incident the advisor said that its impact has started coming to Pakistan. Chairman, Federal Board of Revenue (FBR) Ahmad Waqar said that valuation advises will be revalued and amended wherever required.
President KCCI, Anjum Nisar said that State Bank of Pakistan's decision for enhancing two percent interest rate has badly affected the industrial sector. He said that if interest rate increases by two percent its impact on industrial and product is enormous. Industrial survival has been put at the stake, he added.
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