Though Finance Minister Muhammad Aurangzeb only mentioned the IMF in the context of its loans to Argentina, everyone knows that the current budget, that of 203-24, which he presented to the National Assembly the day before, was meant to satisfy its demands, so that the present hiatus in the negotiations between the two, can be ended and Pakistan get another package from it. Mr Aurangzeb came out with the commitment to take the debt-to-GDP ratio to 13 percent in the next three years. It is presently about 9 percent, and along with a number of other indicators, has remained stubbornly the same. Mr Aurangzeb apparently plans to increase the ratio by a percentage point every year over the next three years. Is it a coincidence that the proposed IMF ESAF is to last three years? It might be a dangerous conditionality to accept, because it may give the IMF the excuse it might need to declare Pakistan’s non-adherence to the programme.
Mr Aurangzeb fielded a number of questions with aplomb, but his emphasis on widening the tax net was noticeable. One group he wished to abolish was that of non-filers. He has a point when he says that no other country has that category. Indeed, Pakistan may well be the only country where individuals and firms who do not even file a tax return are allowed to play a part in economic life, to the extent of being taxed. However, the emphasis he placed on digitisation of the economy was significant. It should be noted that digitisation of the economy is going to take place because it suits the consumer, and miscreants will find remaining undocumented impossible. It is therefore upto to the tax collection machinery to move with the times and exploit these means. As he noted, cash transactions are related to the undocumented economy.
It has to be noted, that just as Wednesday’s budget had no real initiative for increasing exports, he did not unveil any new initiative during the press conference, even though there is no real way of servicing the country’s debt without a boost in exports. Even the expedient of going to the IMF is no longer serving the purpose, and it is fast reaching the point where it will be impossible to pay for our imports. Mr Aurangzeb may find that the rush he now faces, of passing the budget in the limited time till June 30, while no mean one, pales in the face of the one beyond that.
