October 6, 2022
imf

• Offering a billion dollar tranche is “the highest priority” for Miftah, preventing a sharp rise in fuel prices.
• Against an increase in personal income tax, it could end the industrial tax amnesty

ISLAMABAD: Newly-appointed finance minister Miftah Ismail said on Wednesday that the International Monetary Fund (IMF) wants Pakistan to take a number of steps to end government subsidies, including fuel and electricity tariffs, and relaunch the expanded system. Fund Facility (CEI).

Before leaving for Washington, Ismail imposed some preconditions on the media, including a review of a large tax of about Rs 1.3 trillion.

The minister said the IMF is working to raise fuel prices and restore taxes, end the sector’s amnesty program, reduce current debt, raise electricity tariffs and secure budget savings to achieve full repayment of the prepaid package.
The previous government had promised an opening balance of 25 billion rubles, which is now a deficit of 1.3 trillion. “We have heard his position (IMF), but we have not yet made any commitments,” he said, adding that Prime Minister Shehbaz Sharif led the coalition government and advised him to bear the least burden on the people.

“We don’t give as recommended, but something should have been done because the IMF program is inevitable,” he said.

The minister initially called for an increase in the tax pardon, saying the IMF’s main focus is on ending fuel subsidies because it creates a tax deficit and that electricity tariffs could be delayed because they have no budgetary impact.

He said savings of Rs 100 billion could be made by cutting the development budget from Rs 600 billion to Rs 600 billion, which ministries cannot use under any circumstances.

“We are not cutting a penny out of the Benazir income support program,” he said, adding that the replacement price for wheat flour has been reduced from 150 rupees to 400 rupees per 10 kilograms and sugar is sold for 70 rupees per kilogram in community stores. . .

“The price of cooking oil has also dropped to 205 rubles per kilo, and its price is now 260 rubles per kilo,” he said.

Asked about his tax impact, Miftah Ismail said Collective Shopping Corporation (USC), which so far has only Rs 4 billion, has been allocated Rs 8 billion, which means space, but it is being done for relief. in any case. population.

The minister said his priority was to secure a $ 1 billion tranche from the IMF and prepare for a future budget, not a two-quarter estimate.

He said he was opposed to raising personal income tax rates because of the recession, but taxation of the rich could be discussed, for example, through inheritance tax, as tax equality is important for efficiency.

But the problem is that this is indirectly reversed, because otherwise the devaluation will widen the funding gap and lead to widespread inflation from high budget deficits, Ismail said, adding that the government would “introduce a soft bill.” a “low” aid package that threatens the country’s economic stability.

“We will not disrupt the economy due to a sharp rise in fuel prices,” said the finance minister, who explained that the price of petrol demanded an increase of 21 rubles per liter in rupees and a tax. oil.17 rubles per liter. that. liter and GST for 234 rubles. per liter. “That’s not possible.”

He said the package announced by former Prime Minister Imran Khan was completely disrespectful and illogical and was not based on a summary of the Ministry of Finance.

He also rescued former Treasury Minister Shaukat for the Tarin package, saying he did not publish a summary on the matter; In fact, no Minister of Finance could, in ordinary speech, support actions that are anything but landmines but atomic bombs and that were soon to be dismantled.

Ismail said he had approved a 67 billion rupee fuel subsidy for April, without prior approval despite the announcement, and now it is estimated that 96 billion rupees in subsidies for the next two months, as the subsidies were against liter of diesel collected. for 51.52 rupees.

“Not only has the government paid these sums from the budget every month, but it has not increased between 25 billion and 50 billion rupees in taxes. That means 1.8 trillion rupees a year, more than the country’s defense budget. “, He said.

The minister said the poor, earning less than 25,000 rubles, supported ground submarines at 1,700 rupees per 80-liter mile and 50,000 rupees per truck from Karachi to Islamabad.

“What have you done to Khan Sahib for this country,” he asked, adding that nothing could be more ruthless.

In response to a question about the increase in the IMF’s tax demands, he said that he explained that nothing could be achieved with taxes during those two months.

He said it was not a requirement of the fund, but he personally believed that a grant of Rs 90 billion for the poor was not justified.

The finance minister expected China to transfer $ 2.4 billion in a few days, followed by an extension of the $ 2 billion deposit protection to trade credit in the coming months.

He said some $ 4 billion in funds were needed for the current account deficit and that arrangements were being made to ensure that foreign exchange reserves would not run out in fiscal years.

During his visit to Washington, Ismail said he would meet with the managing director of the IMF, the governor of the World Bank, G7 leaders and ministers of Turkey, Saudi Arabia and China, as well as with the IMF delegation. Leader of Pakistan.

He said that the government will ensure financial discipline and tighten its own area to restore the IMF program, and that no additional burden will be imposed on the people.

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