Financial overview: Dar acknowledges inflation has gone up
Admits that the govt’s claim to increase the tax net has been unrealistic.
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.
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.