We have to enhance the tax-to-GDP ratio, decrease circular debt, and end the losses of the state-owned enterprises
KARACHI: Finance Minister Muhammad Aurangzeb on Friday claimed that it was misconstrued that the International Monetary Fund (IMF) opposed subsidies whereas it wanted the targeted ones to be increased.
“The fact is that the IMF is against untargeted subsidies. It actually wants the targeted subsidies to be enhanced,” he told the media during his visit to a Utility Store in Karachi’s posh Defence neighborhood. In response to a question, the finance minister said the IMF program was actually Pakistan’s one as its objective was to pull the country out of its economic mess.
“We have to enhance the tax-to-GDP ratio, decrease circular debt, and end the losses of the state-owned enterprises. The IMF is also asking for these reforms that are in the best interest of our country.” The minister said more steps were needed for the improvement of the economy and the government was taking measures for this purpose.
Since the $3 billion bailout was approved in June last year, the country has implemented several IMF-mandated reforms including budget adjustments, increasing interest rates, and higher energy prices. Pakistan has been tasked with gradual fiscal consolidation, broadening the existing tax base, improving tax administration, and debt sustainability, all while protecting the vulnerable segment of its society.
Aurangzeb pointed out that Pakistan had to fully focus on its exports as it was one of the ways the country could boost its foreign exchange reserves. He added that Pakistan was an agricultural country and it must not import farm-related commodities. Talking about the wheat yield target, the minister said now the country was producing 26 million tons of the grains. “If the country enhances its yield target to over 40 million tons annually, it will become self-sufficient.”
Aurangzeb said Prime Minister Shehbaz Sharif had enhanced the amount of the Ramazan Package from Rs7.5 billion to Rs12.5 billion so that people belonging to the vulnerable segment of the society could be provided with essential items on subsidised prices against the ones in the open market. He continued that under the Ramazan package, 1,200 mobile points were set up to provide essential items to the people in their respective areas apart from utility stores.
“There will be no compromise on the quality of the food items being sold at the utility stores.” Responding to a suggestion about donations from philanthropists to the Utility Stores Corporation, the minister termed it a good proposal. “The philanthropists of this city [Karachi] have always generously helped the poor and they must donate money to the utility stores.”
