Says focusing on fiscal consolidation, relief to masses; Sees maladministration behind economic woes; Had no other option but to take ‘tough’ decisions
Federal Minister for Finance and Revenue Miftah Ismail on Saturday said worsening government administration had caused huge damage to the national economy and drifted it to the verge of collapse that compelled the coalition government to present a tough budget.
Addressing the post-budget press conference here, he said if that maladministration were not addressed timely, it would cause further devastation and that was why the incumbent government had to present such a budget to address those issues.
Finance Minister Miftah Ismail said the Budget 2022-23 preparation was the “most difficult” thing to do as the country was going through a very critical phase and the government is targeting “fiscal consolidation” and “provision of relief” to the masses in the next fiscal year.
Flanked by Information Minister Marriyum Aurangzeb, State Minister for Finance Aisha Ghaus Pasha, Miftah Ismail thanked his team for the great work they have done in helping them in formulating the Budget 2022-23.
He maintained they presented the budget when the country was going through a difficult time. He criticized the former government for not taking steps to resolve the issues.
The Minister said the priorities of the federal budget are “fiscal consolidation” and providing relief to the underprivileged public, as he spoke of reversing the “damage wrought by Imran Khan” at a post-budget press conference.
“Growth and inflation are our targets, but our first target is fiscal consolidation, to move the country away from the point where Imran Khan left it at,” Ismail said in the media briefing alongside Information Minister Marriyum Aurangzeb and Minister of State for Finance and Revenue Dr Aisha Ghous Pasha.
Fiscal consolidation entails policies aimed at reducing government deficits and debt accumulation, according to the OECD.
“Our second target is to give relief to our poor people and for which we are taking difficult decisions,” he added, stressing that the government was trying to save the country’s finances and not allow it to become another Sri Lanka.
In his presser, Ismail began by cautioning that the country was going through an unprecedented period, which he described as “very difficult”. “I have never seen a more difficult time in the past 30 years where on the one hand the international environment is very challenging and [on the other] the government or administration has worsened [the matter] and nothing was done to resolve issues,” the finance minister said.
He offered some figures for what the government had been doing in the current fiscal year. With regard to electricity subsidies, he said Pakistan paid more than Rs1,100bn for the purpose.
Moreover, he said, the government is compelled to pay Rs500bn in circular debt.
Ismail said that despite having “one of the most efficient units of power generation in the world”, Pakistan is producing electricity at costly rates. “Why is it pricey? It is because of poor administration,” he added, referring to the previous government.
Speaking of energy, he said when there was a loss of “Rs1,100-1,600bn” to the federation, “it will sink the company”.
He said he was “not being alarmist”, but Pakistan’s economy “cannot bear it”. He said the Rs1,600bn amount is more than the defence budget and what is spent on running civilian government combined. When it came to gas, Ismail said a subsidy of Rs400bn was given in the current fiscal year. “You are buying gas for $20 and selling it for $1-2 — from where will the state bring the money?”
He asked people to look at who was giving the subsidy and who was receiving it. “On average, those giving the subsidy have an income of less than Rs50,000 per month and those receiving it have income in the hundreds of thousands.” He made the case that the government needs to “fix things”. “It is unfortunate that we have to approach other countries for packages, loans or deposits,” he lamented. “Pakistan is an honourable country and a nuclear power. We have to set our economy right.”
He added: “We cant afford expenditure for which we don’t have the capacity.”
The minister then went on to question how the country was run by the PTI. “I don’t want to criticise but I will say that the subsidies that Imran Khan gave in February in violation of the IMF deal. Basically, he gave a cheque when he didn’t have any money in his account.
“We see this happening in the market. People give cheques and flee abroad. He did an act like this. In Karachi, we call it topi ghumana. Are countries run like this?” He told the journalists present there that they and those in the federal cabinet were privileged, but the common man was not. “If you will drown them and make a Sri Lanka-like situation, the nation and history will not forgive you, and your conscience will also not forgive you.”
He then stressed: “So if difficult decisions have to be taken, they will be taken. There is no choice but to take tough decisions.”
Ismail said the country had reached this point because of “mismanagement”, but “henceforth the government will do management”.
Addressing the reporters, he requested their cooperation to not be so hard on the government for taking the tough decisions. “If I raise the petrol price, I don’t take it home, I deposit it in national treasury, and your country cannot endure losses.”
He said subsidising fuel was no longer an option as that would eventually lead to increasing interest and inflation, which would make it difficult to borrow.
Ayesha Pasha then spoke to stress that the budget philosophy was to “burden people as little as possible” and there were many measures in that respect in the budget.
She also addressed the “complaints” about the budget not having any anti-inflationary measures. “Can we change the global cycle? But we did what we can. We did not raise indirect taxes or impose agriculture taxes.”
Ismail said there will be a tightening of fiscal policy to decrease the deficits. “We have increased tax, but the IMF is not happy. We have tried to reduce personal income tax but there will be some pain. I don’t think oil prices will fall this year,” he added.
He said the government’s latest proposals are designed to bring more people into the tax net, but cautioned that the measures will be debated upon in parliament, and the premier had also rejected some of his proposals. “So there will be some changes in the next 15 days,” Ismail added.
He said that flour, sugar and ghee will be provided on discounted rates at Utility Stores Corporation throughout the year.
Miftah said there was a need to correct the country administratively, otherwise, its economy would not be run. “We have to go to other countries for loans, packages and deposits. Pakistan is a proud country, a country of proud people, a nuclear power country, and we will have to fix our economy,” he said. “We should not incur such expenditures that we cannot afford.” The minister said the budget was presented at a difficult time when the country was passing through very hard times.
The Finance Minister said the government has taken difficult decisions keeping in view the interest of the country. We have reduced our expenditures as well as subsidy on power and gas to reduce deficits.
Finance Minister Miftah Ismail said we have imposed additional taxes on the well-off people while efforts have been made to reduce the tax on personal income tax.
Alluding to the soaring prices of palm oil in the international market, the Finance Minister said the package of 20 billion rupees have been given to promote the cultivation of oil seeds.
