21:03
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ISLAMABAD: The proposed amnesty scheme to bring more people into the tax net is still under the process of finalisation, said Dr Abdul Hafeez Sheikh, federal finance minister, on Tuesday.
Addressing the inaugural session of the Pakistan Society of Development Economists (PSDE) on economic reforms for productivity, innovation and growth, the minister said, “The focus is to ensure provinces who after the 18th amendment are financially and administratively more autonomous, being engaged in generating revenue and broadening the tax base, especially in the areas of agriculture, services and real estate.”
Mentioning about the tax amnesty scheme, he said that efforts are being made to significantly improve the tax-to-GDP ratio. The aim is to achieve this through expanding the tax base and developing an equitable and efficient revenue mobilisation system.
“Due to the ongoing reforms, revenue collection, he said, is expected to increase by 25 percent with the Federal Board of Revenue’s (FBR) collection growing to Rs2,381 billion in FY13.”
The government has signed the Afghan Transit Trade Agreement and undertaken a major reform of the refunds system to ensure timely refunds to the business community, he said.
Measures were taken in March 2011 and reinforced in the budget in June by removing sales tax exemptions and zero-ratings on major sectors, said Shaikh.
“In FY13 budget, we have done away with several taxes and the tax slabs have been reduced,” he said.
The minister said that around 700,000 new potential taxpayers have been identified by using third party data, of which 500,000 have been issued notices and the assessment is underway.
Pakistan is engaged with multilateral and bilateral partners to ensure continued access to international funding. Funding in terms of receipts from the privatisation proceeds, launching of 3G licence and money due from the United States government will secure external funding this year, said Sheikh.
Pakistan’s debt-to-GDP ratio stands at under 60 percent. “There has been significant improvement since 2001 when the ratio exceeded 82.9 percent of GDP.”
“It is envisaged in the medium-term macroeconomic framework to reduce total public debt to 54 percent of GDP by FY14. The foreign exchange reserves remain stable at $14 billion. Due to repayments to the IMF during the coming years, the external debt is expected to reduce further.”
“Most part of the Pakistan’s external debt falls under concessional loans obtained from the Paris Club, bilateral loans, and those obtained under the multilateral agreements such as the IMF programme.”
To ensure financial discipline, Sheikh said, the government is committed to adhere to the policy of net zero quarterly borrowing from the State Bank of Pakistan (SBP) and intends to pay off the outstanding stocks of SBP credit in eight years.
Inflation touched the highest mark of 25 percent in October 2008 and the growth slowed to 1.7 percent in FY09. PPP-led coalition government took tough decisions to overcome the situation, said Shaikh.
Due to the efforts made for economic revival, Pakistan’s economy continues to show signs of recovery with improvement in key macroeconomic indicators.
Despite major external and internal shocks, the economy has shown resilience and is projected to grow by 4.3 percent in FY13 after a healthy growth of 3.7 percent in FY12.
Exports continue to show a healthy growth, remittances remain strong keeping foreign exchange reserves stable and inflation has continued to show a declining trend, he said, adding that the goal is to build on these positive trends.
Last two years have been difficult as resources were diverted to meet the challenges of relief and rehabilitation for the flood victims. Floods also impacted agricultural output but the growth is expected to be strong with better-than-expected cotton, wheat and rice production, said the minister.
The government has successfully doubled the tax collection from Rs1 trillion to Rs2 trillion in the last four years; remittances have more than doubled from $6.4 billion in 2007-08 to $13 billion by 2011-12. Inflation has moderated to 8.8 percent in the first four months of FY13 and exports are likely to cross the target of $26 billion in FY13, he said.
The minister said that hard budget constraints are being ensured to maintain fiscal discipline and expenditure has been curtailed to 35 percent of the budget in the first four months of FY13.
Fiscal austerity measures of Rs15 billion, including freezing of non-salary current expenditures and ban on new recruitments are currently under implementation.
The security situation has affected the business environment and attractiveness in the eyes of the investors.
A key challenge is to increase the foreign direct investment, which has declined in recent years largely due to adverse security situation.
To encourage private sector and to make the investment climate more attractive, the investment policy 1997 has been revised. “A new investment strategy (2010-15) has been formulated in consultation with the federal and provincial governments, he said.
The Board of Investment (BoI) is currently in the process of finalising memoranda of understanding (MoUs) with Investment Promotion Agencies (IPAs) of Argentina, Kuwait, Tajikistan, Sudan, Jordan and Egypt.
In order to facilitate foreign companies / entities, their online registration with the BoI has been initiated.”
The government, the minister said, initiated mega projects in the energy and infrastructure sectors, which would provide the economy a base for sustainable economic growth in the future.
The government has undertaken key structural reforms in the power sector under the power sector reform plan targeted at improving governance and legal framework and ensuring financial sustainability, he said, adding that 3,334MW has been added since 2008.
Ongoing reforms have resulted in stability in the power sector and power shortages have been minimised along with the reduction in line losses and improved recovery of arrears.
Moreover, import of LNG and natural gas from neighbouring countries are being pursued to overcome the energy crisis, said Shaikh.
The minister also said that restructuring plans of Pakistan International Airlines (PIA), Pakistan Railways and Pakistan Steel Mills are under implementation.
Subsidy is being targeted to those who need care and support through programmes such as Benazir Income Support Programme at Rs60 billion, Bait-ul-Maal at Rs2 billion, Ramazan package at Rs2 billion and sugar subsidy at Rs4 billion.
The government has, in addition, absorbed the impact of hike of global petroleum prices to reduce the burden on the people by reducing the petroleum levy by Rs45 billion in FY12. A subsidy of over Rs1,500 billion has been paid in the electricity sector to minimise the burden of rising cost of production.
The government continues to support tertiary education by funding the higher education programmes with an outlay of Rs48.6 billion, he said.
Economic performance will be bolstered by investing in software of economic growth, issues of economic governance, institutions, incentives and human resources, he said, adding that the growth drivers such as entrepreneurship and innovation will be encouraged by reforming institutions such as civil service, legal and judicial framework and taxation.
“Trade reforms will be oriented towards moving to more value-added exports in the textile and clothing segment, opening up bilateral trade and investment opportunities with India following granting of the most favoured nation (MFN) status, he said.
Addressing the inaugural session of the Pakistan Society of Development Economists (PSDE) on economic reforms for productivity, innovation and growth, the minister said, “The focus is to ensure provinces who after the 18th amendment are financially and administratively more autonomous, being engaged in generating revenue and broadening the tax base, especially in the areas of agriculture, services and real estate.”
Mentioning about the tax amnesty scheme, he said that efforts are being made to significantly improve the tax-to-GDP ratio. The aim is to achieve this through expanding the tax base and developing an equitable and efficient revenue mobilisation system.
“Due to the ongoing reforms, revenue collection, he said, is expected to increase by 25 percent with the Federal Board of Revenue’s (FBR) collection growing to Rs2,381 billion in FY13.”
The government has signed the Afghan Transit Trade Agreement and undertaken a major reform of the refunds system to ensure timely refunds to the business community, he said.
Measures were taken in March 2011 and reinforced in the budget in June by removing sales tax exemptions and zero-ratings on major sectors, said Shaikh.
“In FY13 budget, we have done away with several taxes and the tax slabs have been reduced,” he said.
The minister said that around 700,000 new potential taxpayers have been identified by using third party data, of which 500,000 have been issued notices and the assessment is underway.
Pakistan is engaged with multilateral and bilateral partners to ensure continued access to international funding. Funding in terms of receipts from the privatisation proceeds, launching of 3G licence and money due from the United States government will secure external funding this year, said Sheikh.
Pakistan’s debt-to-GDP ratio stands at under 60 percent. “There has been significant improvement since 2001 when the ratio exceeded 82.9 percent of GDP.”
“It is envisaged in the medium-term macroeconomic framework to reduce total public debt to 54 percent of GDP by FY14. The foreign exchange reserves remain stable at $14 billion. Due to repayments to the IMF during the coming years, the external debt is expected to reduce further.”
“Most part of the Pakistan’s external debt falls under concessional loans obtained from the Paris Club, bilateral loans, and those obtained under the multilateral agreements such as the IMF programme.”
To ensure financial discipline, Sheikh said, the government is committed to adhere to the policy of net zero quarterly borrowing from the State Bank of Pakistan (SBP) and intends to pay off the outstanding stocks of SBP credit in eight years.
Inflation touched the highest mark of 25 percent in October 2008 and the growth slowed to 1.7 percent in FY09. PPP-led coalition government took tough decisions to overcome the situation, said Shaikh.
Due to the efforts made for economic revival, Pakistan’s economy continues to show signs of recovery with improvement in key macroeconomic indicators.
Despite major external and internal shocks, the economy has shown resilience and is projected to grow by 4.3 percent in FY13 after a healthy growth of 3.7 percent in FY12.
Exports continue to show a healthy growth, remittances remain strong keeping foreign exchange reserves stable and inflation has continued to show a declining trend, he said, adding that the goal is to build on these positive trends.
Last two years have been difficult as resources were diverted to meet the challenges of relief and rehabilitation for the flood victims. Floods also impacted agricultural output but the growth is expected to be strong with better-than-expected cotton, wheat and rice production, said the minister.
The government has successfully doubled the tax collection from Rs1 trillion to Rs2 trillion in the last four years; remittances have more than doubled from $6.4 billion in 2007-08 to $13 billion by 2011-12. Inflation has moderated to 8.8 percent in the first four months of FY13 and exports are likely to cross the target of $26 billion in FY13, he said.
The minister said that hard budget constraints are being ensured to maintain fiscal discipline and expenditure has been curtailed to 35 percent of the budget in the first four months of FY13.
Fiscal austerity measures of Rs15 billion, including freezing of non-salary current expenditures and ban on new recruitments are currently under implementation.
The security situation has affected the business environment and attractiveness in the eyes of the investors.
A key challenge is to increase the foreign direct investment, which has declined in recent years largely due to adverse security situation.
To encourage private sector and to make the investment climate more attractive, the investment policy 1997 has been revised. “A new investment strategy (2010-15) has been formulated in consultation with the federal and provincial governments, he said.
The Board of Investment (BoI) is currently in the process of finalising memoranda of understanding (MoUs) with Investment Promotion Agencies (IPAs) of Argentina, Kuwait, Tajikistan, Sudan, Jordan and Egypt.
In order to facilitate foreign companies / entities, their online registration with the BoI has been initiated.”
The government, the minister said, initiated mega projects in the energy and infrastructure sectors, which would provide the economy a base for sustainable economic growth in the future.
The government has undertaken key structural reforms in the power sector under the power sector reform plan targeted at improving governance and legal framework and ensuring financial sustainability, he said, adding that 3,334MW has been added since 2008.
Ongoing reforms have resulted in stability in the power sector and power shortages have been minimised along with the reduction in line losses and improved recovery of arrears.
Moreover, import of LNG and natural gas from neighbouring countries are being pursued to overcome the energy crisis, said Shaikh.
The minister also said that restructuring plans of Pakistan International Airlines (PIA), Pakistan Railways and Pakistan Steel Mills are under implementation.
Subsidy is being targeted to those who need care and support through programmes such as Benazir Income Support Programme at Rs60 billion, Bait-ul-Maal at Rs2 billion, Ramazan package at Rs2 billion and sugar subsidy at Rs4 billion.
The government has, in addition, absorbed the impact of hike of global petroleum prices to reduce the burden on the people by reducing the petroleum levy by Rs45 billion in FY12. A subsidy of over Rs1,500 billion has been paid in the electricity sector to minimise the burden of rising cost of production.
The government continues to support tertiary education by funding the higher education programmes with an outlay of Rs48.6 billion, he said.
Economic performance will be bolstered by investing in software of economic growth, issues of economic governance, institutions, incentives and human resources, he said, adding that the growth drivers such as entrepreneurship and innovation will be encouraged by reforming institutions such as civil service, legal and judicial framework and taxation.
“Trade reforms will be oriented towards moving to more value-added exports in the textile and clothing segment, opening up bilateral trade and investment opportunities with India following granting of the most favoured nation (MFN) status, he said.
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