The IMF Board will meet on July 3 and is likely to take positive decision on Pakistan program, Adviser to the Prime Minister on Finance Dr Hafeez Shaikh said on Saturday.
Speaking at the post-budget conference organised by the ICAP here on Saturday, Dr Hafeez Shaikh said Asian Development Bank (ADB) has agreed to provide additional $3.4 billion in budgetary support to help taking economic reforms and stabilise economy. The decision to this effect was taken on Saturday during his meeting with the ADB country director and this is a program loan.
Adviser told that out of $3.4 billion, ADB will provide $2.1 billion in the next fiscal year starting from first quarter. This will help building reserves and further stabilise external account position.
He appreciated the ADB's commitment to Pakistan's economic reform agenda and said this support is in addition to the project portfolio.
Shaikh said the budget was based on consultations and greater input was sought from industry and businesses to set platform for stabilisation and then move on to growth.
He said continuity of policies is always a fundamental requirement and necessary for development and growth. During last 72 years only two elected governments and two prime ministers could complete their term and national policies remained changing after every few years. The lack of growth trend was another issue. "We should focus to stabilize economy and should take steps for quality of growth not only growth rate", he said.
He added, "As we have not been able to achieve continuation of sustained growth, we have been going to the IMF again and gain."
He said exporters are most important people for the government because they earn for the national exchequer. Regarding tax on zero rated sectors, he said the government has proposed tax on their domestic sales.
He accepted that the payment of refunds is a genuine issue that is affecting liquidity position of exporters. He asked the exporters to sit together with the concern authorities to discuss way out of this issue.
He invited all the stakeholders to come forward with positive suggestions to improve country's economic situation. However, he said, people should not play politics in these real issues. "I give my commitment that the refund issue would be resolved as the government does not want to use the exporters' money," he vowed.
He claimed when this government came into power, the debt and liabilities were reaching Rs 31,000 billion (Rs 31 trillion) with foreign component of $97 billion, export growth was zero percent and $10 billion were utilised to maintain the artificial exchange rate. On the other hand, the country required Rs 2,000 billion for payment of interest, fiscal deficit was Rs 2.3 trillion in just one year and foreign reserves fell from $18 billion to below $10 billion during the last two years of the previous government, he added.
Shaikh said that there is also a question as to what kind of growth is needed. "We had growth in 60s but it cost the country," he said.
He said after coming into power, the present government mobilised $9.2 billion from friendly countries and also achieved oil facility on deferred payment. The imports were curtailed and as a result the current account deficit was reduced by $7 billion.
"We want $6billion partnership with the IMF because it would benefit the country in acquiring resources from other multilaterals," he said.
Shaikh said that FBR revenue collection target of Rs 5.5 trillion is a challenging target but there are only two ways to deal with the budget deficit; increase the revenue or reduce expenditure. He said that nobody likes to pay taxes because it is difficult and upsets the people and powerful lobbies. It is not like a walk in the park.
The second is the vulnerable segment of the society for whom the allocation has been increased from Rs 100 billion to Rs 191 billion for the next fiscal year.
The government has allocated Rs 153 billion for the tribal districts of erstwhile FATA which have been merged into the KP and providing Rs 216 billion subsidy to the electricity users consuming less than 300 units.
While speaking at the conference Federal Board of Revenue (FBR) chairman Syed Shabbar Zaidi made it clear that the date of amnesty scheme will not be extended and June 30 is the last and final to document undeclared assets.
Regarding budget, he said that 1600 tariff lines have been proposed to protect the local industry. "Before budget, we consulted all the stakeholders and budget proposals were finalized in the light of recommendations and suggestions of the local industry and businesses", he said. He said the revenue targets in the budget are according the potential.
He invited positive suggestions from the local industry and businesses for improvement in tax system and reforms.
In panel discussions, the panellists discussed different budget proposals and gave their suggestions. They said the government has presented a budget to bring economy on track.
Editor Business Recorder Wamiz A Zuberi, former presidents Karachi Chamber of Commerce and Industry Siraj Kassem Teli and Zubair Motiwala, former president ICAP Asad Ali Shah, Asif Haroon and others from Karachi also spoke on this occasion.