Finance ministry aide terms budget highly subsidised

Says budget FY20 sets direction for economic stabilisation

ISLAMABAD: Ministry of Finance’s official spokesperson and adviser Dr Khaqan Hassan Najeeb has said macroeconomic stabilisation is the need of the hour and the federal budget for 2019-20 has set the direction for economic stabilisation through squeezing imports and export-supporting measures.

Speaking at a seminar titled “SDPI Post-Budget (2019-20) Analysis”, organised by the Sustainable Development Policy Institute (SDPI), Najeeb said the budget would help reduce the fiscal deficit, adding 11% tax-to-GDP ratio was not sustainable and civil and defence expenses needed to be controlled.

He pointed out that the ambitious tax revenue target of Rs5,555 billion showed the direction of the budget and indicated the government’s objective to enhance revenue collection and take austerity measures.

He said the budget was highly subsidised, where allocation for the Ehsas programme had been raised to Rs193 billion from the previous Rs120 billion and electricity subsidy had been raised from Rs168 billion to Rs217 billion. Commenting on the government’s amnesty scheme, Najeeb said the scheme was not for revenue generation, but was aimed at giving a chance to tax evaders to become part of the productive economy.

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He said the Benami Law of 2017 was now effective, which would be implemented from July 1, 2019, whereas the government had details of foreign assets and bank accounts of 152,000 people, data of 14,000 unregistered cars and transactions of domestic accounts.

“Time has now come to go after the tax evaders and the category of non-filer is being abolished.”

Analysing the federal budget, SDPI Executive Director Dr Abid Qaiyum Suleri said the first federal budget of Pakistan Tehreek-e-Insaf (PTI) government was more or less the same as the previous five budgets under the International Monetary Fund (IMF) programme.

However, this time the federal government, after paying provincial share under the National Finance Commission (NFC) award, would be left with only Rs3,462 billion to be spent on debt repayment. Expenditures under the Public Sector Development Programme (PSDP), for defence needs and for day-to-day expenses needed to be financed by borrowing from external sources, he said.

He stressed the need for synchronising the Federal Board of Revenue (FBR) and the National Database and Registration Authority (NADRA) data with the help of technology, which would help reach tax evaders and achieve the revenue-collection target of Rs5,555 billion.

“The government needs to make the asset declaration scheme successful to get rid of indirect taxes,” he remarked. Moreover, he proposed, in order to meet conditions of the Financial Action Task Force (FATF), the government should evolve a regulatory mechanism, where a substantial amount of assets and money was parked, to document gold and real-estate market. Pakistan Muslim League-Nawaz (PML-N) MNA Romina Khurshid Alam said the budget did not offer any relief to the public, especially the social sector, where no substantial increase had been made in health and educational funds.

“Owing to poor policies of the government, everything has become drastically expensive, where the poor and middle class is suffering a lot,” she said. “There is no authority and regulatory mechanism to keep a check on inflation, which the government needs to look at.”

SDPI Joint Executive Director Dr Vaqar Ahmed said in order to give greater certainty to markets, the government should also openly discuss prior conditions and other terms agreed with the IMF.

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He said the government expected the FBR to collect much higher revenues with the same administration, which missed the previous year’s revenue target.  Therefore, the tax administration reforms must supplement the reform of tax policy.

On the expenditure side of the budget, spending on general public services could be reduced by consolidating and merging federal ministries and divisions, he added.

“A key trigger of growth now will be export-oriented foreign direct investment (FDI), if the government can clear regulatory bottlenecks,” Ahmed said.

Published in The Express Tribune, June 25^th, 2019.

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