Stressing the need for privatisation of state-owned enterprises (SOEs), Finance Minister Muhammad Aurangzeb on Saturday said the estimate of losses suffered by these entities during the current fiscal year stood at Rs10 trillion – thus exacerbating the budget deficit – as the government was moving ahead with the process.
Pakistan would need another International Monetary Fund (IMF) programme if the country failed to expand tax net, warned the finance minister, as Islamabad is aiming at a bailout package from the Washington-based lender to the tune of $6 billion to $8 billion covering at least a three-year period under Extended Fund Facility (EFF).
It is already going ahead with expediting the privatisation process and the PIA – the national flag carrier – is the first entity going to be handed over to the private sector. However, it is believed that the government will still have 49 per cent of the shares even after giving the controlling powers to the buyer.
As far as the narrow tax base is concerned, Pakistan has one of the worst tax-to-GDP ratio in the world and Prime Minister Shehbaz Sharif recently promised to increase the same to 15pc in the first phase.
That’s why the IMF has been pressing Pakistan to bring the retail, real estate and agriculture into tax net – a demand which is also a need Islamabad after decades of failure to tax the affluent and burdening the masses through indirect taxation.
At a press briefing in Washington, Aurangzeb, who was accompanied by Pakistani Ambassador to the US Masood Khan and others, talked about the digitalisation of Federal Board of Revenue (FBR), which, he said, would lead to improved revenue collection by addressing the challenges of leakage and the failure to meet the targets.
The IMF mission would reach Islamabad by the middle May, said the finance minister, adding that the terms and conditions for the loan programme were to be decided only then.
About attracting the much-needed foreign investment, he promised to offer a better investor-friendly climate by restoring their confidence and mentioned that Saudi Arabia would invest $5b in the phase.
