Shaukat: IMF’s strict conditions carry a political cost


Tax GDP ratio to be increased every year

Mohammad Arshad

Federal Minister for Finance Shaukat Tarin on Wednesday said that ongoing programme of the International Monetary Fund was very tough because the IMF had imposed very strict conditions; these conditions have a lot of political price here in Pakistan.

Therefore, we have requested IMF to extend little bit facilitation in the wake of third wave of Coronavirus pandemic.

Addressing a news conference here, he said, “We are not quitting IMF programme, but we have asked IMF to grant some relaxations and hopefully IMF will have to grant these relaxations.”

He said, “We have told IMF that we were collecting 92% revenue which had now lowered to 57% due to Covid-19.”

“We are expanding tax net; however, IMF must not give us target for revenue collection because it is not possible to higher the revenue collection from Rs 3000 billion to Rs 5500 billion all of a sudden” Tarin said.

“We will have to increase the revenue collection target and we are currently making efforts in this regard,” he said.

He said they were concerned that Pakistan’s circular debt was increasing and there “should be some brakes” and stability in it.

Tareen added that the government would prove that through various measures, but it didn’t mean that it would increase tariffs on the common person since Prime Minister Imran Khan was against it. “We will apologise to them on this and they are sympathetic to us.”

Addressing taxation, he said its ambit would be further increased through “innovative methods” and the tax-to-GDP ratio would increase every year by one to two per cent.

Tarin added that sudden increases on the orders of the IMF, as had been done in 2019, would “not happen.

This is the wrong way of doing it”. Instead, he said, gradual annual increases would be the better way to go and efforts would be made to convince the IMF about it.

“If people think we are trying to come out of the IMF programme, then no we will not.

You get a stamp [of approval] from it because of which the world sees you are going towards stability, however, the targets
they’ve given us at this time, we’ll tell them that the third wave of Covid-19 has arrived and give us some space at this time.”

He said that Covid-19 was the biggest challenge and threat to economy, otherwise, revival of our economy had already begun.

He said that Prime Minister was worried about the rising prices of daily commodities; therefore, we are trying to reduce
difference of prices of farms and retailers.

He said that revival and improving the performance of revenue and power were bigger challenges for the government and government would launch Kamyab Kissan program on the pattern of Kamyab Jawan program to provide maximum facilitation to
the farmers and growers.