Money matters: Government to unveil budget on June 12

Finance Minister Ishaq Dar urges nation to help govt in overcoming economic crisis; calls for broadening tax base.

ISLAMABAD:

There will be no quick fixes to Pakistan’s economic crisis, cautioned newly appointed Finance Minister Ishaq Dar in his maiden press talk on Saturday. Warning that the debt burden was extremely high, Dar was clear that austerity measures and increasing the tax base would be some of the steps his government takes as it tries to put Pakistan’s economy back on the rails.

“If the nation sacrifices today, our children will reap benefits tomorrow,” he said.

While outlining his plan for the next five years, Dar revealed that the government will set ambitious tax targets in the next budget, which he said would be presented on June 12. “The crisis cannot be overcome without cooperation from the masses,” said Dar, while appealing for the peoples’ support for the PML-N’s economic policies.

Dar, while adding that everyone was aware of the current economic situation and the limited fiscal resources available, said the government’s priorities would be servicing the over Rs14 trillion debt and meeting the defence needs of the country.



He said that for the next fiscal year the proposed allocation for debt servicing is Rs1.15 trillion. He was however quick to point out that this massive debt was something the PML-N had inherited from the previous government. “The over Rs14 trillion debt is not our fault. When we left the government in 1999 the total debt was less than Rs3 trillion”, he added.

He also stated that the defence budget for the next fiscal year would be Rs627 billion, and by adding other hidden defence expenses, this would come to about Rs970 billion.

He announced that Prime Minister Nawaz Sharif has approved presenting the next year’s budget on June 12 while a meeting of the National Economic Council will be held on June 10. He stated that the premier had also reconstituted the NEC by appointing four federal ministers as its members along with all provincial chief ministers and their nominees as members.

Explaining the aims of the budget, he said the first priority of the government would be to resolve the crippling energy crisis by addressing the issue of circular debt, which he said had crossed Rs500 billion.

To a question on inflation, Dar said the government cannot overcome this issue in one day. He said for the next fiscal year “ambitious tax target will be given to the FBR and we will make sure that they are achieved”. But he did not disclose any figures, arguing that the premier had not yet approved the plan. “Only austerity cannot help overcome the crisis and we have to increase the tax base,” he added.

On that note, the finance minister remained noncommittal over the issue of raising salaries of federal government employees in next budget. The Ministry of Finance had prepared two proposals for this, the first being giving a raise equal to the prevailing rate of inflation and the second being to increase the salaries by 10%.

Responding to a question regarding the anticipated massive shortfall in this year’s Rs2.381 trillion tax target, Dar said corruption in the FBR was the main reason behind massive shortfalls in the collection. He said it was unfortunate they were discussing revising the target downwards to Rs2.05 trillion nearing the end of the fiscal year.

Independent assessments however, show that the FBR may end up collecting Rs1.960 trillion at best.

Regarding the issue on seeking a fresh programme from the IMF, Dar said the country has to make huge payments to the international creditors in the next six months. “The problem is that we can print rupees but we cannot print dollars,” he said in a veiled reference to his desire to seek another bailout programme from the IMF. Dar has a different approach towards the IMF than party’s senior leader Sartaj Aziz who opposed going to IMF for at least next three to four months. He also said an IMF team will be visiting Pakistan in the third week of this month to hold post programme monitoring dialogues.

He said that everyone was aware of the precarious position of foreign currency reserves and claimed that his party had prepared a “comprehensive plan”, which would be unveiled at an appropriate time.

Published in The Express Tribune, June 9^th, 2013.

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