Islamabad, June 24, 2023: Finance Minister Ishaq Dar has expressed the confidence that the ninth review with the International Monetary Fund under the extended fund facility will soon be concluded.
Winding up discussion on the budget 2023-24 in the National Assembly today, he recalled that the country demonstrated complete compliance on all prior actions but due to the gap on external financing, it could not be materialized. He, however, said Prime Minister Shehbaz Sharif held two meetings with the Managing Director of IMF in Paris recently during which it was agreed that both the sides will make a last ditch effort to complete the pending review.
The Finance Minister said both sides held consultations over the last three days. He said we have agreed to take additional taxation measures of 215 billion rupees, clarifying that it will not burden the poor people. Similarly, he said we have agreed to reduce current expenditures by 85 billion rupees.
He made it clear that this reduction will not affect the annual development plan as well as salaries and pensions of government employees. He said the IMF has agreed to our stand.
The Finance Minister said we believe in complete transparency and that is why the details of the meetings with the IMF are being shared with the public.
He said once the agreement is reached with the IMF, it will also be uploaded on the website of the finance ministry.
Ishaq Dar said as a result of the understanding reached with the IMF, he said the annual FBR tax collection target is being enhanced from 9200 billion rupees to 9415 billion rupees.
The total outlay of the budget will now be 14480 billion rupees. He was confident that these measures will also help reduce the fiscal deficit.
Referring to the burgeoning budget of pension, the Finance Minister said it has become unsustainable. He announced a series of pension reforms, including the establishment of the Pension Fund. He said rules and regulations for the fund are being framed. He also announced the abolishment of multiple pensions for the officers of grade 17 and above, saying the retired officer will now receive only one pension.
He said that after the death of a pensioner and his or her spouse, the dependents will receive the pension up to 10 years only. In case of reemployment after the retirement, the officer may opt either for the pension or the salary. He stressed that these difficult decisions are imperative to steer the country in the right direction.
The Finance Minister further said that the government will continue providing essential commodities to the people at reduced rates through the Utility Stores Corporation. For this purpose, an amount of 35 billion rupees has been allocated, including five billion rupees for Ramazan Package and 30 billion rupees for the Prime Minister Relief Package. He said the allocation for Benazir Income Support Programme is also being revised up to 466 billion rupees.
Commending the services and sacrifices of the armed forces in defence of the country, Ishaq Dar assured the timely release of sufficient funds to them as envisaged in the budget.
The Finance Minister said 30 billion rupees have been reserved to deal with the issue of climate change and food security. He said 30 billion rupees have been earmarked for the solarization of agri tube-wells and 31 billion rupees for the youth.
Ishaq Dar announced that the limit of investment on pensioners’ benefit accounts under the National Savings Scheme is also being enhanced from five million rupees to 7.5 million rupees. He said that the authority of the Federal Government on Petroleum Development Levy is also being limited to 60 rupees.
Highlighting the contribution of overseas Pakistanis, the Finance Minister said that 80 billion rupees have been allocated to facilitate their remittances and this will also include a prize scheme. Ninety billion rupees have been set aside for various schemes under Sustainable Development Goals.
Ishaq Dar said a super tax was introduced last year and it will also be maintained for the next fiscal year. He said we have made it progressive by removing discrimination and adding more slabs to it. As regards the 0.6 percent on cash withdrawal for non-filers, he said it is important to document the economy of the country and enhance tax to GDP ratio.
The Finance Minister clarified that the tax on bonus shares and cash dividends will be paid by the shareholders and not the companies. He said that tax on dividends is 15 percent and 10 percent on bonus shares.
Ishaq Dar maintained that the windfall gain tax is not directed against any company or individual. He said this tax will be applicable from 2021. He said this tax is in place in many countries and it is aimed at adding value to the system.
Regarding tax on the manufacturers of inefficient fans, the finance Minister said they are being given a time of six months to upgrade their technology to produce more energy efficient fans. He said this tax of 2000 rupees will now be enforced from January next.
The Finance Minister pointed out that 62,000 tax cases worth 3.2 trillion rupees are pending before courts. He said that the Alternate Dispute Resolution System is being strengthened to address this issue. He said a three-member committee headed by a retired judge of a High Court or the Supreme Court is being constituted to resolve tax related issues. He said the decision of the committee will not be binding on the individual taxpayer, but the FBR.
Ishaq Dar said that the government will continue following the austerity measures during the next fiscal year as well.
The Finance Minister declared that restrictions on imports have been withdrawn to address the problems of the business community. He said that these restrictions were imposed last year to ensure the payments of external liabilities. He said our focus will now be on enhancing the foreign exchange reserves of the country.
The National Assembly today approved 97 demands for grants pertaining to various ministries and their attached departments for the next fiscal year.
Finance Minister Ishaq Dar moved the demands for grants.