Financial overview: Dar acknowledges inflation has gone up

Published: January 2, 2014
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Prime Minister Nawaz Sharif addressing the special cabinet meeting on January 1, 2014/ PHOTO: PID

Prime Minister Nawaz Sharif addressing the special cabinet meeting on January 1, 2014/ PHOTO: PID

ISLAMABAD: 

While admitting that inflation had gone up and the government’s claim to increase the tax net had been unrealistic, Federal Minister for Finance Ishaq Dar on Wednesday blamed various factors including the previous government’s policies for the current mayhem.

Speaking at the special cabinet meeting headed by Prime Minister Nawaz Sharif, the finance minister gave a detailed briefing on the state of the economy, the government’s policy actions and the future roadmap for the country.

Inflation has not gone down

Dar acknowledged that inflation was going up, but put the blame on the previous government, saying it had delayed the increase in power tariffs, which the new government was compelled to do.

He said the Pakistan Muslim League-Nawaz (PML-N) government had cleared the circular debt left by the previous government and imposed new taxes equal to 0.75% of GDP (around Rs200 billion) according to a commitment given by the caretaker government to International Monetary Fund (IMF), which, according to him, also contributed to the uptick in inflation.

Hitting out at the media, Dar said printing of currency notes did not contribute as much to inflation as claimed by it.

“The media was active in reporting about increase in prices, but it did not give similar coverage to the drop in rates of essential commodities, like tomato and onion, later,” he said.

He suggested that restoration of the magistracy system was a solution to the problems of profiteering and hoarding as the federal government could not address these issues since they fell under the purview of provinces.

Dollar vs Rupee situation

Dar blamed speculators for the depreciation of the rupee as he claimed credit for what he said were corrective actions of the government that strengthened the rupee to Rs105.5 to a dollar. “It will improve further,” he said.

On the fiscal front, Dar said if tax revenues stood below target, the government had a backup plan, which would be shared at an appropriate time.

Subsidies and circular debt

He claimed that the government was timely paying power subsidies on account of price differential claims and had so far paid Rs131 billion, including the Rs30 billion released on Wednesday.

Contrary to the claims of Rs460 billion circular debt, he contended that the outstanding amount was Rs225 billion, which was primarily the result of non-payment of electricity bills by the provinces and private parties.

He said the government was considering handing over all power distribution companies to the provinces at the book value.

Tax net and flawed data

To a question regarding bringing 3.2million identified potential taxpayers into the net, Dar said, for the first time, that the data compiled by the National Database Registration Authority (Nadra) is flawed.

However, Dar had declared in his budget speech that on the basis of the Nadra data, the PML-N government would bring 500,000 people into the tax net in the current financial year.

On the basis of the same Nadra data, Pakistan has committed to the IMF bringing an additional 100,000 people into the tax net and, for that purpose, the government issued notices to 42,000 people in the four months of the fiscal year.

Published in The Express Tribune, January 2nd, 2014. 

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Reader Comments (15)

  • Shabbir
    Jan 2, 2014 - 3:40AM

    “However, Dar had declared in his budget speech that on the basis of the Nadra data, the PML-N government would bring 500,000 people into the tax net in the current financial year.”
    Sharif is teaching josh-e-khitabat to everyone in their party.Recommend

  • Zeshan
    Jan 2, 2014 - 3:41AM

    Did someone say Experienced team?

    Recommend

  • Jan 2, 2014 - 3:56AM

    our every goverment speak truth late!! this govement also like other govermens is failing in goals!!

    Recommend

  • Hassan
    Jan 2, 2014 - 4:06AM

    We also acknowledge that a charter accountant can’t be a sufficient finance minister.
    Family limited party PMLaptopN

    Recommend

  • naeem khan Manhattan,Ks
    Jan 2, 2014 - 4:24AM

    “He( Dar) said the government was considering handing over all power distribution companies to the provinces at the book value”. Which means they are dumping the problems of power shortages in the laps of the provinces. K-P government will be stupid to buy into this treachery, they must demand to take over the ownership of the production of the power generating along with distribution. This government is playing politics with the economics of provinces and eventually it will have some serious repercussions not only for the provinces but as well for federal government, no one is going to buy into their nefarious schemes. They better get on the ball to levy some taxes on themselves and the upper income people, this conservative government would rather squeeze average Pakistani rather than their rich supporters, just look at their record for the last 6 months, it is always easy to blame the predecessor than come up with some viable economic policies to put the economy on even keel.

    Recommend

  • ali
    Jan 2, 2014 - 4:54AM

    Hahahaha. This man is a joke the way he makes things out of thin air.I bet one day he will prove 2+2 is 6.so much for the family limited experienced team.Recommend

  • Jibran
    Jan 2, 2014 - 6:13AM

    These rulers are totally detached from the miseries of the people. People are starving, and they are debating whether there is inflation or not.

    Recommend

  • polpot
    Jan 2, 2014 - 7:59AM

    @Zeshan: “Did someone say Experienced team?”
    +++++++++++++++++++++++++++++++++
    Expreinced in making excuses for failures.

    Recommend

  • vaqas
    Jan 2, 2014 - 9:15AM

    Considering that the rupee is hinged to the dollar and the fact that our dollar stash has gone down from 17 billion to a measly 2 billion, on top of the printing of extra notes, i find it hard to be speculation rather than actual facts as the cause of loss of worth of our rupee.

    Recommend

  • Zaida P
    Jan 2, 2014 - 10:07AM

    Pakistan should also have made radical land reforms soon after independence. This was an oversight that continues to plague Pakistan.

    Recommend

  • Paindoo
    Jan 2, 2014 - 10:08AM

    Wow! They are only experienced in making excuses I guess.

    Recommend

  • YP Mississauga
    Jan 2, 2014 - 12:37PM

    ” Dar said printing of currency notes did not contribute as much to inflation as claimed by it.”
    First Joke of the 2014

    Recommend

  • ishrat salim
    Jan 2, 2014 - 10:59PM

    Insha Allah soon this govt will repeat their old mantra of ” dollar bhego mulk bachao “…….remember PML N trolls.They were also accused by WB / IMF of fudging the figures when they were in power during their 2nd stint…..

    Recommend

  • Haroon Farooq
    Jan 3, 2014 - 1:43AM

    @Shabbir:
    He said 500000 people over the 5 yrs.1 Lac each yr.Already 70000 more tax payers have been added.Plz get ur facts straight.

    Recommend

  • Wajid
    Jan 21, 2014 - 9:15PM

    The Pakistan Economy Watch (PEW) said that leaders of the PML-N have started disappointing masses through their statements. Masses have voted PML-N to power to lessen their difficulties and not to take note of their fictional statements which are adding to disappointment, it said. Dejected and highly demoralised masses deserve to see difference between their current and previous rule.Recommend

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