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IMF being urged to show leniency, Finance Minister

Finance Minister Shaukat Tarin has said that the International Monetary Fund (IMF) would be convinced to relax conditions specifically those related to power tariff hike.

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Addressing National Assembly’s Standing Committee on Finance, Mr Tarin said that the higher power tariff was leading to corruption and hampering economic growth. The conditions agreed to under the IMF programme were very harsh, he said.

He talked about expanding the tax net instead of increase in taxes to achieve revenue targets. He also said that the government is going to take alternative measures to reduce circular debt instead of tariff increases. However, the state-owned entities that the government is unable to run would be privatized, he said.

The finance minister revealed that IMF was being urged to show a little leniency to Pakistan after it had been hit by the third wave of COVID. He explained that unless high economic growth is achieved neither revenue collection would rise, nor job opportunities would be available to people or productive capacity of the economy could improve.

He said that the country has been in the stabilization mode since the past two years and it isn’t helping anymore. He said the public-sector development programme would be increased so that all the provinces would get equal growth opportunities in the next budget.

Read More: IMF cannot dictate policies to institutions in Pakistan, Teresa Daban

Criticizing the high policy rates of the State Bank of Pakistan (SBP), he said that it was a mistake to keep policy rate at 13.25pc in the past.

He also talked about the increase in capacity payments in the power sector and said that even 4pc to 5pc growth next year would not be insufficient.

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He explained that the IMF target could be achieved through alternative measures, as higher electricity rates were only promoting corruption.

He informed the committee that a comprehensive strategy had been formulated to shift the gear and move to higher economic growth.

The minister further said that he did not believe in increasing taxes to increase revenue collection but those outside the tax net would be tapped. Chances for any harassment by FBR officials would be eradicated for which audit procedures would be modified he said.

12 sectors namely price stability, agriculture, industry, revenue, housing, social protection, national services, debt management and privatisation of loss-making state-run entities have been selected by the minister on which economic experts had already started working so that they could come up with long-term planning.

He also complained that 85pc of provincial revenues was being spent on nine major cities, while the health and education sectors across the country were being neglected.

Tarin informed the standing committee that China would be asked to provide jobs to 10 million Pakistani in its industry as it had employed workers from across the country.

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