ISLAMABAD: Federal Minister for Finance Shaukat Tarin has said that it is not possible for Pakistan to come out of the IMF programme, as he agreed to review the Federal Board of Revenue’s (FBR) powers of arresting taxpayers in consultation with senators.
The federal minister’s comments came during his discussion with the Senate Standing Committee on Finance in Parliament House on Tuesday. The meeting was held under the committee’s head, Senator Talha Mehmood’s, chairmanship.
Pakistani authorities and IMF, for the time being, have agreed to continue talks to narrow down differences, but the IMF-sponsored programme has been put on halt mode as the international money lender conveyed that the sixth review under the Extended Fund Facility (EFF) will be accomplished in September this year instead of July 2021.
“Pakistan has forwarded its desire to combine the sixth and seventh reviews jointly under EFF in September 2021,” said official sources.
Tarin told the committee that the government would rewrite powers of the FBR to arrest and prosecute taxpayers involved in income concealment.
The government had decided that tax notices would be dispatched through a third party, the finance minister told the committee.
He said Pakistan’s economy was facing a difficult situation as the current account deficit (CAD) had peaked at $20 billion and the government accepted the tough conditions of the IMF programme.
The IMF-provided loan programme was frontloaded under tough conditions as the discount rate was hiked to 13.25%, so the debt servicing doubled, he said.
The minister said that he did not agree to the IMF condition of increasing personal income tax to collect an additional Rs150 billion in the next fiscal year, adding that he plainly informed the fund’s team that he would not increase the burden on those who were already paying their taxes.
He said he would increase taxation his own way.
A financing gap of $20 billion, he said, had left no other option for the government but to go to the IMF and accept their tough conditions, such as hiking discount rate, devaluation of the exchange rate, and increasing power and gas tariff.
“We have gone to the IMF because the country did not have dollars for repayment of past loans,” he said, adding that $10 billion short-term borrowings were obtained by the previous government.
He said that now the strategy was to move towards an inclusive, sustainable, and long-term growth trajectory to create more jobs.
The minister argued before the committee that he was not in a position to commit that the GDP growth would be sustainable or not because it would be known after three to four years whether the country was heading towards sustainable growth or it was another boom-and-bust cycle as experienced in the past.
