Finance minister-in-waiting says administrative independence will be given to key government institutions. PHOTO: FILE
In his first interaction with local and international press, Umar said that his party’s government would appoint a reform-oriented chairperson for the Federal Board of Revenue. He also assured complete autonomy to the Pakistan Bureau of Statistics - the national data collecting agency that remained at the centre of controversy amid allegations of manipulation of economic growth and inflation data.
“The first real relief that can be given to the people of Pakistan is that the economy will be run on fundamentals rather than political gains,” said Umar while criticising the management of the last PML-N government.
“What happened in the last one year was very unfortunate, as it was run on raw politics and Pakistan’s economy was deliberately put on the path of risk to win elections,” he added. Umar said that reckless expenditure resulted in a fiscal deficit of close to 7% of Gross Domestic Product and an incredibly expansionist monetary policy was followed at the same time.
“The nation’s destiny cannot be changed in 100 days but the PTI will take concrete and specific measures that will give direction,” said Umar.
The former chief executive of Engro Corp, among the country’s biggest conglomerates, also shared his vision over turning around loss-making enterprises. He talked about giving them administrative freedom but his plan still puts the financial burden on the exchequer.
The single biggest task for the revival of Pakistan International Airlines is to create fiscal space by addressing the issue of its outstanding debt of Rs367 billion, said Umar.
He also said that the government was paying Rs22 billion a year as additional penalties since it was not recognising a circular debt of Rs550 billion.
He said turning around Pakistan Steel Mills (PSM) was more challenging. All the last three feasibility studies have determined that the PSM could be a viable entity if some additional financing is provided to enhance its production capacity.
“In last five years we have lost close to Rs150 billion but did not inject Rs80 billion to revive it.”
Economic policy should be at forefront of coming elections
Umar said that close to 200 public sector enterprises will be placed in a wealth fund, which will be out of administrative control of the line ministries. He said that these enterprises will be managed and led by professionals rather than bureaucrats. He hoped that no new legislation will be required to transfer the entities from the line ministries to the fund. He said that seed money will not be required to create the fund but financing needs of the wealth fund will be met by the finance ministry.
Pakistan posts 5.8% growth rate
He said that majority of the steps to be taken do not require legislation but a final judgment will be made once the opinion of the law ministry is taken. On a question, Umar said that it has not yet been decided whether another budget will be presented in this fiscal year “but everybody knows that the last budget targets were unrealistic”.
He vowed that the PTI government will reduce reliance on indirect taxes, which will be a relief for the masses. It will increase reliance on direct taxation, he added.
At present total collection of direct taxes amounted to only 38% including withholding taxes that are direct in nature.
World Bank sees Pakistan’s economy slowing next year
Umar also said that the FBR’s tax policy will be separated from tax administration, adding that there was large-scale tax evasion in Pakistan.
The would-be minister also said that Pak-Qatar LNG deal should be made public. “(However) if there is a particular clause that binds us by international law to keep it secret, we will hold that part.”
Published in The Express Tribune, August 8th, 2018.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (5)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ