ISLAMABAD: Hours after the International Monetary Fund (IMF) expressed concern over the government’s failure to broaden the tax base through the 2023-24 budget, Finance Minister Ishaq Dar said that Pakistan is a sovereign country and cannot accept everything from the lender.
Addressing the Senate Standing Committee on Finance and Revenue, he responded to the IMF’s objection to tax exemptions in the recently released budget.
“Pakistan is a sovereign country and cannot accept everything from the IMF,” the finance czar told MPs. He added that as a sovereign country, Islamabad should have the right to give some tax concessions. The IMF wants us not to give tax concessions in any sector.
The country’s finance minister assured senators that the government knows how much tax it needs to collect and where the revenue can be sourced. He added that this is the reason why the government has increased the tax target from $7.2 trillion to $9.2 trillion in the upcoming budget.
“This target is apart from tax exemption. There is no budget coming from tax-exempt sectors. We will take the IMF into confidence on this,” he said, insisting that Pakistan should be allowed to decide on the matter. .
The minister also said that the government is focusing on four drivers for economic growth in the new budget.
He also spoke about the package given to the IT sector, stating that the government cannot “restrict” the IMF’s demands to incentivize youth in the IT sector.
The federal minister said that we want to provide employment opportunities to the youth through development in the IT sector. He added that the government has set a target of achieving $15 billion in IT exports in the next five years.
IT exports this year were $2.5 billion which is very low. We want to take IT exports to $4.5 billion in the coming year.
‘Geopolitics happening against Pakistan’
Talking about the massive default migration, the finance minister said that geopolitics is happening against Pakistan and hence the country is defaulting.
“Foreign hostile elements want Pakistan to turn into another Sri Lanka and then negotiate with IMF Islamabad,” Dar said.
Criticizing the amendments made to the State Bank of Pakistan Act during the previous government, he said these amendments resulted in a “state within a state”.
He further said that the amendments made in the State Bank Act are unsustainable.
According to the finance minister, changes have been made in the governing rules of the State Bank, but they are not complete yet.
On Pakistan’s external payments, he once again assured that the country will not delay any external payments.
Pakistan does not need to go to Paris Club to reschedule debts. We will manage Pakistan’s external payments,” he also said. The finance minister added that even the managing director of the Washington-based lender has assured that Pakistan will not default and the country will get good news on June 30.
IMF goes public on Pakistan’s budget criticism
The minister also briefed the senators about the economy and the IMF as it was reported earlier today that the IMF has expressed displeasure over Pakistan’s budget for the fiscal year 2023-24.
The IMF said that the government has taken measures to broaden the tax base and reduce tax expenditures, as well as to lose tax amnesty terms against the terms of the fund’s program.
Calling for major changes to the budget, the Washington-based lender said it is ready to revise the budget before it is approved by parliament.
Responding to a question about the international lender’s views on the budget, IMF Resident Chief in Pakistan Esther Perez Ruiz said the staff remains engaged (with the government) to discuss policies to maintain stability. .
“However, the draft FY24 budget misses an opportunity to broaden the tax base in a more progressive manner, and the long list of new tax expenditures further reduces the transparency of the tax system and BISP. “Reduces the resources needed for more assistance to the most vulnerable recipients. Development costs,” he said.
“The new tax amnesty goes against the terms of the program and the governance agenda and sets a harmful precedent,” Esther said, adding that measures to deal with the energy sector’s liquidity pressures are needed. Can be incorporated with a broader budgeting strategy.
It said that the IMF team is ready to work with the government before the budget is approved.
