Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Sheikh has said that Pakistan’s economy is now heading towards stability.
He was addressing a press conference which was attended by Federal Board of Revenue Chairman Shabbar Zaidi and Secretary Finance Naveed Kamran Baloch. He said that Pakistan is now heading towards economic stability due to timely and prudent measures taken by the government.
He said the government was confident to surpass the growth target of 2.4% of GDP set for the current fiscal year (2019-20) as after gaining stability on the external front during the past year, the economy is now on the right path.
Mr. Hafeez said there has been considerable growth in exports with a sizable reduction of 73% in the current account deficit, with stable foreign exchange reserves and rupee-dollar parity. Furthermore, he added that the stock market had also been stable for the last couple of weeks.
At the same time, the overall revenue collection has also increased to Rs. 580 billion during the first two months of the current year from Rs. 509 billion of the corresponding period of last year, showing 25 percent growth.
Due to a decline in imports, revenues in that regard were decreased, but domestic revenue collection surged by 40% during the period, he added. During the first two months of the current financial year, the fiscal deficit was under control. It was recorded at Rs. 24 billion during the period.
The government is expected to collect up to Rs. 1 trillion in non-tax revenue by December next year, which includes Rs. 200 billion flows from cellular companies, Rs. 400 billion from State Bank of Pakistan profits provided exchange rates remain favorable and Rs. 300 billion from the sale proceeds of two RLNG-based power plants.
The adviser pointed out that the inflation rate was lower than what they were expecting and it would hopefully decrease in the next few months. He said that inflation is a major challenge though its prevailing rate was ‘lower than expectations’.
Furthermore, he said that the government has taken several measures to control inflation, which includes no borrowing from the State Bank of Pakistan (SBP). The top priority of the government is to reduce inflation through various measures.
“We have not borrowed even a single rupee from the SBP during first the two months (July-August) of the current fiscal year,” he added.
Sheikh said the government has fulfilled its pledge of clearing all verified sales tax refund claims of around Rs. 22 billion, filed till 2015, which benefited 10,000 people. “The income tax refunds of up to Rs 100,000 pending since 2015 have also been cleared,” he added.
He said the government has also introduced a new system with no human intervention to ensure immediate refunds for exporters. Under the system, which is called ‘FASTER’ and has been operational since August 23, refund claims of the preceding month would be cleared by 16th of the next month, he added.
He said the government also expects to collect around Rs. 1,000 billion non-tax revenue, out of which Rs. 200 billion would come from renewal of cellular companies’ licenses, Rs. 300 billion from the LNG terminals’ privatization which will be finalized by December and Rs. 300 billion as interest from the SBP.
Talking about power sector reforms, he said the circular debt, which had been reduced to just Rs. 10 billion from Rs. 38 billion per month, would be zero by December next year. He said that by overcoming power theft and other losses, the government has saved around Rs. 120 billion.
Hafeez Sheikh said the government has decided to hand over public organizations to the private sector, specifically those which the government departments can’t handle. He said that the government had reactivated the Sarmaya Pakistan Company for fast-track restructuring of 20 loss-making public sector entities and put 10 new companies on the privatization list and issued their advertisements for a fast-track sale process.
The adviser hinted at the addition of two profitable financial institutions — National Bank of Pakistan (NBP) and State Life Insurance Corporation (SLIC) — to the list of fast-track privatization to improve their productivity and potential.
He urged the people to remain calm during this difficult time as the government has to take long term decisions for their betterment.
Increase in Filers
FBR’s Chairman, Shabbar Zaidi while responding to a question said the number of tax filers had increased by 0.6 million to 2.5 million this year from 1.9 million last year. Around Rs. 6 billion has been received from the new tax filers, he added.
He said the FBR has launched a mobile application which will allow the taxpayers to easily file their income tax returns and pay their taxes.