Shaikh urges austerity to check inflation

Finance Minister Abdul Hafeez Shaikh urged political parties to join hands in order to make the country self-reliant.

ISLAMABAD: Finance Minister Abdul Hafeez Shaikh on Friday urged political parties to join hands in order to make the country self-reliant.  “With reduction in public sector borrowing and austerity measures, we can bring down inflation,” he told the Senate while summing up the budget debate.

He said that the government will honour its commitments with international donor institutions. “Had the country not approached the IMF, it would have gone bankrupt,” he claimed, and declared that, from now on, the rich will not be allowed to get benefits in the name of the poor. He said subsidies will now be targeted at certain sections of society. People using up to 300 units of electricity monthly will have their subsidies intact, but those running as many as 11 air-conditioners will not be afforded this benefit, he said.

Capital gains tax will be levied at all costs, said the finance minister, adding that the recommendations put forward by the Senate will be considered closely.

Denying that the government has withdrawn subsidies on edible items, Shaikh  said that Rs4.2 billion in funds for the Utility Stores Corporation still remained intact. “We are not withdrawing subsidies, but rationalising them.” He pointed out that the civil government’s budget is Rs65 billion, which is less than that allocated for Pepco. “We are trying to balance direct and indirect taxes and after the budget is implemented, we will work out how to improve the tax to GDP ratio.”

Shaikh said that tax collection is necessary for self-dependence and that the government is taking sincere measures in this regard. While calling for unity amongst all the stakeholders, Shaikh said that, “It is not time to play politics… we have to be realistic. I can understand the nation’s desire to gain self-reliance but we cannot reach the goal without the participation of all.”

Highlighting just how local market prices are affected by movements in the international markets, the minister said that “the government cannot ask global forces to curtail oil prices for Pakistan if there is an increase in prices internationally.” “But, we can look into some measures where we can accommodate our people,” he said. “The government had to take some bold but unpopular decisions.”

Shaikh said the government intends to make Federal Bureau of Statistics (FBS) a transparent institution. He was responding to a recommendation of Professor Khurshid, Ishaq Dar, Mir Hasil Bizenjo and Pervez Rashid. They proposed that an amount of Rs10 million should be allocated for making FBS an autonomous body.

“Grant is not an issue; rather we are trying to make it a transparent body,” he remarked.

Dar said that a bill to make FBS an autonomous body was pending with the National Assembly for the last five months, and should be expedited.

The minister said that the movers of the recommendation would be briefed about the measures to be taken by the government for making the body transparent. The movers withdrew their recommendations on the assurances of the minister.

Meanwhile JUI-F, Awami National Party and Baloch senators staged a walk-out from the session against the un-availability of relief goods for cyclone-affected areas.  The Senate was adjourned sine die.

Published in The Express Tribune, June 19^th, 2010.