ISLAMABAD: The government said on Tuesday that after conclusion of an agreement with the International Monetary Fund (IMF) this month or next month, a comprehensive reforms agenda would be placed before the nation to increase the tax-to-GDP ratio to 14 percent as well as increase in export and investment rate.
Speaking at a press conference, Minister of State for Finance, Ali Pervez Malik said that “when we concluded program with the IMF this month or next month after that a full-fledged agenda of reforms would be placed before the people”. He said that the government target is to is increase the tax to GDP ratio to 13-14 percent after one percent every year.
Additionally, he said that increasing exports to GDP ratio to 15 percent is another target of the government through addressing the challenges of productivity and competitiveness as well as to increase the dismally low investment to GDP ratio to increase to 30 percent from existing 13 percent to bring it at par with India by moving towards saving that the federal government did not have the money even for interest payment after transfer of share to provinces from divisible pool.
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He further stated that as far as defence expenditure are concerned these are not for Islamabad only but is for the entire country. He said that to bring about stability and improvement in economic fundamental, these issues have to be resolved in consultation with the provinces.
On pension issue, the state minister said that the prime minister and finance minister has decided that new indication in the federal government would be on contributory pension scheme. He said that Rs 2,000 billion pension expenses of federal and provincial are simply unsustainable and this could be taken ahead without reform. He said as the armed forces service structure is different, therefore, they have been given time so that after aligning pension to come to contributory schemes.
All these difficult problems are being solved by the prime minister but at the same time government is fully aware of that all these reforms are of painful for the people whether they are salaried class, exporters or shopkeepers but we appeal to the people that we have to tread this path for improvement.
The minister promised that the government taxes on salaried class as it would achieve revenue target. He said long-terms economic growth, required structural reforms and government priority is to increase the tax to GDP ratio, exports to GDP and investment GDP.
He said that additional taxation measures have been taken to mobilize Rs 3.5 trillion in additional revenues. The Minister also stated the government would implement right-sizing in ministries and departments and the provinces would have to contribute to social protection programmes.
He said that the government allocated Rs 600 billion for social protection, of which just 1 percent was being utilized in Islamabad, so the provinces would have to contribute.
Malik added that the government was devising a plan for rightsizing ministries/division and the premier had announced the shutting down of PWD. It is not a matter of few billion but the PWD dealt with development projects of between Rs 100-200 billion.
The Minister said that the government took difficult decision to curtail the Public Sector Development Program (PSDP) so that the revenues measures could be restricted to existing levels. Malik added that the government has been pursuing privatization programme and PIA privatisation and Islamabad airport outsourcing was underway.
The World Bank consultation is underway for devising a roadmap with regard to pre-privatization and post-privatisation scenarios for DISCOs.
Copyright Business Recorder, 2024
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