Federal Minister for Finance and Revenue Shaukat Tarin Thursday said that Pakistan would get $2.77 billion on August 23 from International Monetary Fund’s (IMF) general allocations of $650 billion it had approved to boost global liquidity amid coronavirus pandemic across the globe.
Addressing a press conference here, the finance minister said that the Fund would directly transfer the amount to the State Bank of Pakistan (PBS), which he said would help further improve the country’s foreign exchange reserves, hence have very good impact on economy.
The minister said that it was unconditional allocations from the IMF which he said would be used in a productivity way. He said that Pakistan had been already working on reform programme to bring stability and sustainability under the IMF programme.
He said that the measures taken by the government had been bearing fruits as was shown by the growth in revenue collection adding that the increase in revenues was indicative of economic growth. The minister thanked the IMF the measure to promote global liquidity, particularly in those countries which have been facing challenges amid Covid-19 pandemic.
The finance minister said that the 2021-22 budget contains a lot of positive steps that the government has taken and so, growth is expected in the coming months. In response to a question regarding tough conditions imposed by the IMF, he said that in mid-March, the global lender had recommended that one way to reduce the ballooning circular debt in the power sector is to increase the tariff. “Our point of view – and the prime minister supports me in this – is that what will an increase do? Perhaps we will get some extra money. But our industry will become non-competitive,” he said.
“We may even end up protecting the poor from the tariff but when we increase the tariff on industries, there will be inflation. How will we protect the poor from inflation?” Tarin pointed out. “So this was counter intuitive,” he added.
The finance minister said that the other thing the IMF spoke about was personal income taxes, which are usually to the tune of Rs113-115bn, but the Fund wanted this ramped by Rs150bn more. “I said that the progressive way of doing it would be to bring those out of the tax net into the fold, rather than putting the burden of additional taxes on to people already paying them,” he said.
