Constitutional amendment: Dar wants exiting govts to clear liabilities

Says govt took unpopular decisions to put economy back on track.

ISLAMABAD:

Finance Minister Ishaq Dar has proposed amending the Constitution to make it binding for outgoing and interim governments to clear their outstanding financial liabilities and achieve budgetary targets aimed at discouraging politically-motivated economic decisions, which are taking a heavy toll on the national economy.

Dar’s comments came at a time when the government is struggling to clear the liabilities of its predecessors and make unpopular decisions to put the ailing economy back on track.

“My government inherited an Rs440 billion shortfall in tax revenues, Rs503 billion in circular debt payments and about $5 billion in debt that the country owed to the International Monetary Fund,” said Dar on Friday.

“The Constitution should be amended so that the outgoing and caretaker governments hand over a clean slate to its successor for economic sustainability,” Dar proposed while chairing a session organised by the pharmaceutical sector that seeks an increase in drug prices.

“If we want to take forward the county, the constitution has to be amended,” the finance minister emphasised. He said after assuming power, his government’s first concern was to avoid a looming debt on international payments.

Dar disclosed that the caretaker government had agreed a programme with the IMF and had sent a summary to Presidency on April 23 this year, seeking its approval for tax measures that the country had to take under the programme.

“The Presidency did not approve the summary, fearing backlash in elections,” Dar said, adding that the Rs200 billion taxes that his government had imposed in the new budget were the same that the caretaker government promised to introduce but the Presidency stopped the move.

Dar’s disclosure is contrary to his earlier claims when he had pronounced that the taxation measures announced in the budget were in line with the PML-N’s manifesto and also that the IMF’s programme was actually a homegrown programme, designed also in accordance with his party’s manifesto.

He said same was the case with electricity prices. The summaries for increasing power tariffs were pending in the water and power ministry that were not cleared by the previous government for fear of a backlash in the general elections.

“During his visit to Pakistan, Germany’s foreign minister complained to Prime Minister Nawaz Sharif that top German companies were not receiving payments for last one and half year due to circular debt,” the finance minister said, adding that the new government did not have an option but to borrow at 10% mark up and clear Rs503 billion debt.

Published in The Express Tribune, September 21^st, 2013.