Federal Finance Minister Shaukat Tarin on Saturday said Pakistan will have to go to the International Monetary Fund (IMF) for more assistance if the US aid under the Kerry Lugar Bill is not approved. Speaking at a seminar on "Corruption in the Private Sector - Causes & Remedies," organised by the Transparency International Pakistan here, the minister said the US aid was a non-military support to be spent on the social sector.
"We don't want to ignore the social sector and the government has planned to allocate more funds for the development for this sector," he added. He pointed out that there is no plan to launch any amnesty scheme to whiten the black money. "I am totally against such schemes that promote corruption and badly hurt promotion of tax tradition," he said.
He said the next tranche of $521 million of the coalition support fund will be received by October 15. He pointed out that the government was slowly removing subsidies. Recently gas subsidy for general public and for the industry has been removed by 2.5 percent to 11 percent, respectively.
He said the tax to DGP ratio is very low in the country and it has to be improved. Presently it is around 8.8 percent while the government has set a target to increase it to 10.6 percent this year. He said tax to GDP ratio has to be increased, as it was stagnant at less than 10 percent for last 10 years. He underlined the need for a tax audit, but said it would be transparent and without harassment.
About Afghan Transit Trade Agreement (ATTA), the minister said it was a main issue and Pakistani government has suggested that the tariff in Afghanistan and Pakistan should be at par to discourage smuggling. He said the government will continue to pursue administrative reforms and encourage meritocracy.
He said the issue of circular debt has been resolved. The target to generate around Rs 90 billion has almost been achieved with the issuance of term finance certificates. He said there is no plan to give any bail out package for the steel sector. He said the government is committed to strengthening the Competition Commission of Pakistan (CCP) and its role as oversight authority is being expanded.
He was of the view that funding of the CCP is the responsibility of the government. According to him the mechanism of funding the CCP through charge of penalties is wrong. The minister said corruption is a scourge around the world. It has a direct bearing on the welfare - economic, social, and quite often, physical welfare too - of hundreds of millions of people in the world, especially in the developing countries.
He said corruption distorts economic outcomes, moving societies away from first-best results. It subverts "property rights" defined in the broadest and undermines the rule of law, weakening the institutional edifice of societies where corruption is endemic. He said corruption hurts the poor and vulnerable the most via higher inflation associated with sub-optimal policy choices, as well as higher costs and poor availability of social services and public goods. He said corruption imposes fundamental welfare costs upon society.
He pointed out that the government, in conjunction with the effort of civil society partners such as TIP, has tried to strengthen, admittedly with partial success in some areas, the institutional framework of economic governance in the country. He said some of the major policy measures include the formulation and ratification by the Parliament of the Public Procurement Rules 2004 - aimed primarily at increasing transparency and accountability of public sector purchases.
Some of the measures taken by the ministry of finance include the enhanced disclosure and transparency of public sector expenditure, particularly of defence spending; the adoption of a Medium Term Budgetary Framework (MTBF) under which budgeting by outcomes is being undertaken; a move towards greater adoption and use of Public Private Partnership (PPP) models to reduce project cost overruns and delays, and to ensure greater efficiency of the Public Sector Development Programme (PSDP) and the strengthening of parliamentary oversight via a quarterly presentation and review of budget and macroeconomic conditions to the relevant standing committees of the National Assembly and Senate. In addition, the leader of opposition in the National Assembly heads the empowered Public Accounts Committee.
He said the government has planned to restructure loss-making public sector entities such as PIA, Railways, Wapda and Pakistan Steel Mills. The restructuring of the Federal Bureau of Statistics will improve the accuracy, timeliness and credibility of official statistics.
The strengthening of AGPR and Auditor-General's offices and the placement of trained Finance Division staff in line with ministries, divisions and departments to improve fiscal discipline and financial governance by performing Chief Financial Officer (CFO)-type role.
He said Fiscal Austerity Committee will recommend measures to improve utilisation of taxpayer's money and effect savings in the government expenditure. "My aim as a finance minister is to be 100 percent compliant with the PPRA rules in force and with international best practice and to ensure the same standards in overall public sector purchases and spending.
He said the government has formulated and enacted Public Sector Purchase Rules 2004 to check corruption in the government and created Competition Commission of Pakistan to discourage cartels. He said much more needs to be done to eradicate the menace of corruption in the country. Sohail Ahmed, Chairman, Federal Board of Revenue said the FBR was not a party to roll back any reforms.
He said that TI Pakistan has not mentioned anything about underinvoicing. The FBR had improved over the years but there is still a long way to go. They had planned performance award for staff achieving targets. He stated that they are establishing a system such as action against taxpayers will not be taken on the whims of some official but all the cases will go through the system stein.
Competition Commission of Pakistan Chairman Khalid Aziz Mirza said the commission has found that trade associations have degenerated into cartels. There was a Mafia effectively working to destroy the law or weakening the commission. The supporters of the law were weak. He stressed on the need for the civil society, media and the government to understand the benefits of the law and give full support to ratifying the ordinance.
Chairman TIP Syed Adil Gilani dwelt on major issues regarding corruption and its wide practices in the private sector of the country. He highlighted the benefits of PPRA, which result in considerable savings as in one tender alone, application of PPRA saved Rs 1.87 billion in Port Qasim Authority. He recommended TI Pakistan suggestion for the application of rule of law across the board without discrimination in the FBR and suggested that the ministry of finance should stop funds of PPRA defaulting departments.
On behalf of TIP, he assured the minister that if PPRA Rules are applied across the board, the resulting savings will generate 30 percent of Development Budget of FY 2009-10 of federal, provincial, corporations and Armed Forces, ie Rs 1,500 billion ($5.5 billion). Arshad A Zuberi, Trustee, TI Pakistan suggested the rule of law across the board without discrimination. Akbar Sheikh, former chairman of All Pakistan Textile Mills Associations and Ehsan Malik, Chairman, Unilever Pakistan also spoke on the occasion.