ISLAMABAD: Federal Finance Minister Ishaq Dar on Wednesday hinted at bringing a mini budget in the foreseeable future, confirming that the government will impose a Flood Levy to increase it’s revenue.
Responding to other questions during the Press Conference, the Finance Minister said that the government is looking to impose tax on the income generated through foreign exchange, by the banks.
The flood levy was a major demand of the IMF to reinstate the program. He said that there is no issue in the 9th review and the present government is committed to complete the International Monetary Fund (IMF) programme.
The IMF has not only sought details of the current quarter but they also wanted to know how the funding of $16 billion, for the rehabilitation of flood affected areas, would be met? and in how much time?
Ishaq Dar said that the country would not default as Saudi Arabia and China would provide deposits in a few days. He also said that the country’s foreign exchange reserves are projected to be in a much better position by June 2023.
He said that tax numbers for the first half of the fiscal year are also almost final and had the Sindh High Court not issued a stay order on the collection of Super Tax, the government could have met the December target as well. On the topic of the PTI white paper, the Finance Minister Ishaq Dar termed it as selective, misrepresented and misleading.
He said the economic situation since April 2022 was strongly influenced by the legacy that the new government got from the previous regime. However, that context was missed in the PTI presentation, while also ignoring the international economic situation, the commodities super-cycle, Russia-Ukraine war impacts and catastrophic floods in the country. These realities should have been kept in mind for making fair analysis, according to the Finance Minister.
He said the International Monetary Fund (IMF) had predicted that one-third of the globe would be in serious recession in 2023 and Pakistan was no exception. The fund had already projected the growth at 2.7 percent of GDP.
Correcting the PTI at one point, Ishaq Dar said that the PTI claims that when the Pakistan Muslim League (PML-N) government ended in 2018, the fiscal deficit was 7.6 percent of GDP which is not true as the fiscal deficit was 5.8 percent.
“Infact, PTI in 2019 increased the fiscal deficit by 7.9 percent while we had left that deficit at 5.8 percent”, he said and added that the PTI government was unable to increase tax collection to Rs 8 trillion in a year time as they claimed.
He also said that the current account deficit was increased in 2018 mainly due to 26% import of machinery equipment, massive investment in energy projects to eliminate load shedding and for security requirements.
Finance minister said that GDP growth during the PML-N tenure ranges from 4.05 to 6.10% while growth ranges from -0.94 to 5.97% in PTI tenure and GDP in-terms of dollar increased by $112 billion in PML (N) tenure while in PTI tenure it increased by only $ 61 billion.
Drawing another comparison, Dar said that per capita income during PML (N) recorded 27.3 percent growth ($389 – $1768) while in 42 months’ tenure of PTI the per capita income reached $1798 only. The investments as a percent of GDP was also higher during PML(N) tenure as compared to the PTI tenure and the confidence of investors and their sentiments were much better in PML(N) than in PTI tenure.
He also said that the PTI’s claim of 1.5 million jobs being lost in the textile industry & many more in other industries, is based on perception and has no supporting evidence.
PTI’s claims to create 5.5 million new jobs during 2019-2022 was incorrect, he stated that only 3.2 million new jobs were created during 2019-2021 according to the Labour Force Survey.
Answering to other questions, he admitted that the LSM was affected and production of major Kharif crops had declined namely, cotton (24.6%), Rice (40.6%) Sugarcane (7.9%) and Maize (3.0%).
He also added that despite global economic meltdown and internal devastating flood situation, value added sectors are showing positive and satisfactory growth.
Government initiatives like Kissan Package, Industrial support package and exports facilitation measures helped revive activities in industrial and agriculture sectors.
According to Ishaq Dar, the country was brought back from the brink of default through import management, resurrection of the IMF programme and reduction in current account deficit. The temporary problems in L/Cs have partially been managed by now and would be restored to normal in near future.
