ISLAMABAD: The Ministry of finance has issued a statement in which it responded to PML-N leader Miftah Ismail’s on the state of the economy in his press conference held on Sunday and called them misleading.
In response to Miftah’s claim that the IMF programme has been suspended as not a single IMF target has been achieved in two years, the ministry statement said: “the IMF programme is intact, and a new mission is expected to be fielded in August to review full-year economic performance.”
It said “the government is committed to reforms and has done significant progress since the programme was launched and subsequently put on hold because of Covid-19. In March 2021, all missed reviews were completed.”
The statement said that “Pakistan has rendered a stellar performance under the Fund programme and following are achievements:
“i) Tax revenues are about to reach 4,700 billion compared to 3,862 billion left by PML-N’s government.
“ii) Reserves have increased to $23.4 billion as compared to $16.4 billion left by PML-N’s government.
“iii) Current Account deficit has been reduced from $20 billion to a surplus of around $1 billion in Jul-May 2021.
“iv) The primary deficit was left at 3.8% of GDP which this government under the most painful economic conditions has succeeded to reduce to 1.1% this year and budgeted at 0.6%. After making adjustments of one-off expenditures for Covid19 and settling past IPP circular debt, this primary deficit is also budgeted to turn to positive 0.1%.
“v) Interest rate which was 7.5% in July 2018, has been brought down to 7% after making necessary adjustments because of the failures of monetary policy under PML-N.
“vi) The failure of monetary policy was starkly reflected in the fact that during Mr. Miftah’s Finance Ministership there was a complete breakdown in government debt market because all borrowings were squirrely sourced from the SBP. Consequently, the SBP debt owed by the government rose from Rs 1,400 billion on 30th June 2016 to more than Rs 5,000 billion by July 2018.”
The ministry said “it is, therefore, useless to suggest that Pakistan has not done anything on the IMF programme. It is curious to note that the Finance Minister of the PML-N government who is single-handedly responsible for pushing the country to seek a new programme and destroyed Pakistan’s economy in just one year by taking the current account deficit to $20 billion and depreciating the currency by 10 percent together with higher interest rates, is checking the progress under the Fund programme from this government and doubting government’s commitment to reforms.”
“This audacity and shameless behaviour are the hallmarks of the PML-N politics,” the statement added.
Miftah claimed in his press conference that the World Bank has stopped provision of loans to Pakistan government.
The ministry said that there is absolutely no truth in this assertion. Only yesterday, World Bank has approved a loan of $442 million.
The ministry also rebutted Miftah’s assertion that Inflation will increase by raising petroleum prices. He also said that the government will have to pay petroleum levy of Rs27.5 per litre and average charge of Rs30.50 per litre will be applied next year. The government has projected Rs 610 billion in petroleum levy for next year.
The ministry said that the government is highly conscious of insulating the consumers from the vagaries of changes in international prices, particularly petroleum prices.
It said in the last one year, against an increase of more than 100 percent in international petroleum prices, while the domestic prices have been increased by around 45 percent. This was done by sacrificing precious non-tax revenue just so that our people are not burdened.
“Next year, we are committed to maintain price stability and hope that prices have peaked and would come down and the need for continued subsidy will no longer be required. Furthermore, the possibility of the lifting of sanctions on Iran would help reduce international oil prices. Also, we are finalising the agreement with Saudi Arabia for the supply of oil on concessional terms which would further alleviate the need for further price adjustments,” the ministry said.
In response to Miftah’s claim that refunds of Rs700 billion are outstanding which have not yet been paid to the people, the ministry said that there is no truth in having such a large amount of refunds due for payment. More importantly, some of the refunds are relating the period when the PML-N showed higher revenues by denying prompt payment of refunds.
The statement said that this government has ended up paying Rs140 billion refunds of that period during the last two years, which was not of its making.
“On the contrary, this government is paying refunds promptly. This year alone it has paid Rs233 billion in refunds which are 82 percent higher than last year.”
The ministry said that Mr Miftah is misleading the nation by claiming that the government has endowed tax machinery with draconian powers of arrest and harassment.
“Mr Miftah should read to the nation the following passage from the budget speech of the finance minister, which on many occasions he has welcomed publicly:
“i) We will restore the purity of self-assessment scheme, which would mean that except when there is any ‘definitive information’ contrary to the information disclosed in a tax return, all tax returns shall be deemed as assessment orders;
“ii) The returns under self-assessment scheme would only be subjected to audit once they are chosen through an automated risk-based selection procedure;
“iii) Furthermore, we would make use of outside auditors for carrying out the audit, which will be done remotely through an e-Audit system;
“iv) These audits would be very serious and wilful evasion shall be considered a criminal offense carrying a jail term;
“v) We will strive to hit hard on harassment of taxpayers.”
It said that accordingly, rather than harassing the taxpayers, the avowed purpose of bringing changes in income tax law is to save people from the clutches of the tax machinery and create simplicity and certainty in the tax system.
The finance minister, when addressing the Senate’s finance committee has announced that the power of arrest would be circumscribed to be exercised not by an additional commissioner but a committee headed by himself.
Regarding surplus of Rs570 billion from provinces, the ministry said: “Mr Miftah is again mistaken on setting the above target. The level of surplus committed by the provinces is done by their voluntary commitment.
“More importantly, this money is not something given by the provinces to the federal government. It is something that is kept by the provinces in their own bank accounts to be used in subsequent years,” the statement concluded.
