Govt must convince IMF to soften loan terms as more taxes to ruin economy

  • 1 year ago
  • 1

LAHORE – The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel Chairman Mian Anjum Nisar has opposed the govt commitment with the IMF to extend taxes by a Rs1.27 trillion within the coming budget, suggesting the economic team to convince the lender for softening its conditions in order that government could pursue its pro-growth strategies through some incentives for the industry.

“We fully back Prime Minister Imran Khan who is considering talk to the IMF for relaxation in its loan conditions because the country sees disruptions within the near future on account of the corona infection’s resurgence. In fact, the govt is during a difficult position, because it cannot grow the economy rapidly through incentives to the trade and industry if it’s to implement the tough IMF stabilization policies,” said the FPCCI former president.

According to reports, the govt has given an undertaking to the IMF that it might continue increasing petroleum levy on oil products to the utmost level this year to gather over Rs510 billion, rather than the budgeted target of Rs450 billion. The petroleum levy target for subsequent year has been set at over Rs600 billion while the provinces have given an undertaking to supply Rs570 billion cash surplus to the federal and increase it to Rs730 billion. He termed it very unfortunate for the trade and industry that the govt also promised to the IMF that it might continue making electricity tariff adjustments next year on quarterly and annual basis through Nepra, jacking up electricity prices by almost Rs5 per unit during the half-moon of 2020-21. the govt has also given an undertaking to form adjustments in gas tariff and to not consider any tax exemption to the industry in future, hitting the economy of Pakistan hard.

The FPCCI former chief said that the country’s economy is witnessing an unprecedented damage under the government’s controversial agreement with the International fund , because it has wreaked havoc on the industry by releasing a slew tsunami of unbearable hike in prices of utility. the govt has also indebted Pakistan to the purpose of crisis, and has now taken us into a situation where the financial institution is being made solely unaccountable to Pakistan’s parliament, which doesn’t seem to be sound. the govt must give the SBP reasonable autonomy to form monetary policy, but don’t open up the county to ups and downs of international capital and its dictation, he said.

Mian Anjum Nisar said the collection target for the Federal Board of Revenue in next year’s budget has been committed at Rs5.96 trillion against Rs4.69 trillion revised target for the present financial year . About Rs500 billion are going to be additional tax generation through general nuisance tax and a private tax reform with the 2021-22 federal budget, which doesn’t match to the bottom realities. Under the agreement, the govt would also bring down the present year’s development program to Rs1.169 trillion against budgeted target of Rs1.32 trillion, leading to slow growth and unemployment within the country.

What the businessmen see today may be a very worrying meltdown with none matching capacity for increasing direct taxation or actually widening the tax net. As a result, presently we are totally exposed to debt, impoverishment and miss-governance on an epic scale, he said. Criticizing the government’s policy , the BMP chairman said the country’s total debt had reached Rs44 trillion, which is around 90 percent of the GDP, while circular debt is probably going to succeed in a whopping Rs4.6 trillion in 2023, with Foreign Direct Investment (FDI) declining by 30 percent and therefore the World Bank’s GDP growth forecast of just 1.3% this year, rock bottom within the region.

The Businessmen Panel chairman said that in pre-Covid time the economy was on the track with 2.4 percent rate of growth till March 2020. However, after May 2020, it witnessed a decline by 1.5% as resources were diverted towards Covid-19 mitigation and containment. within the current situation and amid the third wave of the pandemic, growth is projected at 1.5% of the GDP and inflation will remain volatile.

Join The Discussion

Compare listings