ISLAMABAD– Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh Saturday unveiled government’s short and long term economic roadmap, focusing on fiscal consolidation and revenue mobilization, to put the economy on growth trajectory after steering it through the stabilization phase of one year.
The advisor was addressing a press conference in the federal capital.
He was flanked by Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtiar, Special Assistant to Prime Minister on Information Firdous Ashiq Awan, Minister for Power Division Omar Ayub Khan, State Minister for Revenues, Hammad Azhar and other senior government officials.
The advisor said the next year would be the year of stabilization for the economy, during which the focus would be on saving the economy from different vulnerabilities and after achieving the target of stabilization, the journey for growth would start.
He said that the upcoming budget for the fiscal year 2019-20 would come with austerity measures to reduce the government expenditures, adding that civilian, military and private sector would contribute in reducing fiscal expenditures.
He said the government had also devised a comprehensive mechanism for gradual reduction of electricity losses from current Rs38 billion per month to zero by 2020.
Shaikh said that the Federal Board of Revenue (FBR) would be given Rs5.5 trillion revenue collection target for the next year and this target could be achieved by taking many strategic measures.
He said that enhancing tax collection was imperative to provide relief to the vulnerable segments of society with the provision of subsidies in different sectors.
The minister said that Pakistan was having lowest tax to GDP ratio in the region, which is just 11 percent compared to 16-20 percent in the regional countries.
He said that only 2 million people were paying taxes in Pakistan, which include 0.6 million salaried class, adding that 85 percent of the total tax was being paid by just 360 individuals or companies.
The advisor said that there were around 341,000 industrial utility connections but only 40,000 were registered for sales tax, while out of 3,100,000 commercial consumers, only 1,400,000 were registered taxpayers.
Same is the case with bank account holders as only 10 percent of account holders were taxpayers, besides out of 100,000 companies registered with Securities and Exchange Commission of Pakistan (SECP) only 50,000 were filers.
The advisor said that government had recently announced Asset Declaration Scheme and given an opportunity to individuals to declare their undisclosed assets by paying just 4 percent taxes, adding that the government would go after the tax evaders once the deadline for this scheme ends on June 30.
Dr. Abdul Hafeez Shaikh said that the country would undergo a period of stabilization for around six to 12 months and after that the government would focus on recovery and high growth.
He said besides fiscal consolidation and revenue mobilizations, the government would focus on inflation to mitigate its impact on vulnerable segments of society.
He said that exchange rate and increase in oil prices at international market were the two main reasons of triggering inflation, adding that it was not in government’s hand to check international oil prices.
However, he assured that the government was planning to provide subsidy to protect low income people.
He said that the government would devise strategies to ensure welfare of common people and help lessen their problems.
He said that the hike in electricity price would not affect 75 percent consumer who utilize less than 300 units as the government would provide subsidy of Rs216 for this purpose.
Similarly increase in gas prices would not affect 40% low end consumers.
He said that the government had launched Ehsas programme and doubled the cash transfers to the poor to protect them.
Another feature of the economic roadmap he said would be the development of backward areas as the government would initiate Rs50 billion projects in these part of the country.
He said Rs6 billion have been provided as Ramzan Relief Package and another Rs30 billion subsidy would be provided on food items in next budget.
He said that job creation was one of the priorities of the government, adding that the government’s programme of building 5 million houses would create jobs in 18 sectors of economy. He said that land has
already been acquired in different cities and this programme would be operationalized soon.
He said that the government had also launched Kamyab Jawan programme under which Rs100 billion have been earmarked to provide loans to youth to start their own businesses.
Similarly, he said that agriculture sector would be uplifted to help create jobs. He said that Rs250 would be spent on 18 agricultural projects in coordination with the provinces.
The advisor said that the Public Sector Development Porgramme (PSDP) funding has also been raised up to Rs925 billion to complete all big projects including dams and roads.
The government was also focusing on enhancing exports and had already made arrangements with China and Turkey to access these markets.
The advisor said that the incumbent government had inherited economy in weak condition as the public debt was around Rs31,000 billion while foreign loans stood at $100 billion. Similarly, the reserves had gone down from $18 billion to below $10 billion and export growth remained stagnant for five years with trade deficit soaring to $30 billion and fiscal deficit hovering around Rs2.3 trillion and circular debt Rs38 billion per month.
He said that the government had taken some decisions to stabilize economy, adding that the it had signed agreement of $6 billion at the interest rate of 3.5 percent with International Monetary Fund which would help stabilize economy.
The programme would also give a positive signal at international level and government would be able to get additional $2 to $3 form World Bank and Asian Development Bank.
He said in addition the government was provided $3.2 billion oil on deferred payments facility by Saudi Arabia which would be operational form July 1.
The Advisor said it was high time that political differences are kept aside and all political parties work for the development of the country to put its economy on growth path.
Meanwhile replying to a question, Omar Ayub Khan said during the tenure of Pakistan Muslim League-N government, the government kept no check on the power theft which resulted in rising of circular debt
to over Rs450 billion.
He however vowed that the measures recently taken against the power thieves were yielding positive results and the monthly circular debt had been reduced by Rs8 billion while it would be further reduced to only Rs8 billion per month in June next year while in December 2020, there would be no circular debt at all.
Planning minister Khusro Bakhtyar said the government had set the growth target for next fiscal year at 4% while for the year 2020-21, the target would be at 6.5%.