Govt Under Pressure to Take Further Austerity Measures Before Upcoming Budget

[hydrabadi_arab]

The annual national budget-making exercise has become a major headache for the government as it grapples with the tough conditions imposed by International Monetary Fund (IMF) and other donors, according to sources in the Finance Ministry.

The sources further said that for the first time, a schedule of release of loans and setting the federal budget parameters have coincided.

Pakistan planned a 12-month schedule for acquiring foreign currency inflows through commercial and soft loans from multiple financial sources for a deficit-reducing mechanism laid out by the IMF technical team. It would have to be operational before the announcement of the budget.

This plan sets some tough targets as per sources of the Finance Ministry. The conditions include total national subsidy to be slashed from Rs. 780 billion to Rs. 491 billion, federal deficit to be reduced from Rs. 3,760 billion to Rs. 2,770 billion, prices of power, gas, and petroleum products to be increased, petroleum levy to be increased by Rs. 8 per liter before June 2022, provincial development plans to be frozen at Rs. 1,800 billion, Federal Public Sector Development Programme (PSDP) to be reduced from Rs. 627 billion to Rs. 554 billion, the Federal Board of Revenue (FBR) tax target to be increased from Rs. 6.1 trillion to Rs. 7.8 trillion.

The tasks of reducing the fiscal deficit and increasing revenues, both requiring the launch of a new mechanism involving federal as well as provincial political and technical support have also given a major headache to the government. This support seems hard to come by, as manifested in opposition to almost all the important actions initiated under commitments to the IMF and the World Bank.

Further, some of these commitments command that the final draft of the budget 2022, to be approved by IMF before the announcement, does away with the Rs. 150 billion corporate income tax exemption available to big players in the economy.

It demands that the budget should retain only those exemptions on goods and services that are of sensitive nature and could bring another wave of inflation. It mandates diverting subsidy allowed to high-slab billing on gas and electricity to the consumers receiving bills under Rs. 1000 a month. Petroleum levy has to be increased under the new formula by Rs. 8 per liter by June 2022 so that the cost of petroleum purchase does not shoot up on the federal deficits index beyond a limit.

It further demands that at least 17 of the public sector institutions listed as the biggest loss-makers are either disinvested, deleted from the operational list, or sold for whatever amount they fetch from the market. The money (up to Rs. 280 billion) thus saved and acquired should be used for curtailing the federal deficit.

Another tough task is selling the new property valuation list to the provincial capitals whose opposition has already put more than $3 billion in loans in danger. These loans, committed by major donors, were tied to the new valuation in all the provincial districts. The harmonization of the Sales Tax regime for which the World Bank has already laid down a mechanism and a timeline that coincides with the upcoming budget is another serious issue.

The IMF has also conditioned the release of remaining tranches from its package to a new action by Islamabad in the forthcoming budget. It entails that all PSDP projects would be allowed funds after the State Bank of Pakistan agree to the money release on fulfillment of a condition. The condition makes it mandatory that a project-inspection mechanism is listed and a plausible timeline is tied up to the bank loans arranged for each project.

Govt Under Pressure to Take Further Austerity Measures Before Upcoming Budget

The annual national budget-making exercise has become a major headache for the government as it grapples with the tough conditions imposed by

propakistani.pk

 

[Mav3rick]

My God!!! Does the IMF now know how superbly our economy is performing, how our remittances are increasing every month, how much our exports have increased magically, how our GDP is going up and PKR devaluation a routine matter, how inflation is at 13% and yet we are all happy and dandy and well off, how there is no more corruption and only the pure live in this land now, how cheap electricity, gas, petrol, medicine, food etc. is and how it can be taxed another 100%!!! how cheap the middle class vehicles are and how cheap the lower middle class bikes are, etc., etc., etc!

If in doubt, all the PTI Government has to do is send the clown @Norwegian and he can prove with his graphs how good the economy is doing...........infact, we might be in a position to give loans to IMF and other countries by now, if we go by that nonsense logic!

 

[hydrabadi_arab]

My God!!! Does the IMF now know how superbly our economy is performing, how our remittances are increasing every month, how much our exports have increased magically, how our GDP is going up and PKR devaluation a routine matter, how inflation is at 13% and yet we are all happy and dandy and well off, how there is no more corruption and only the pure live in this land now, how cheap electricity, gas, petrol, medicine, food etc. is and how it can be taxed another 100%!!! how cheap the middle class vehicles are and how cheap the lower middle class bikes are, etc., etc., etc!

If in doubt, all the PTI Government has to do is send the clown @Norwegian and he can prove with his graphs how good the economy is doing...........infact, we might be in a position to give loans to IMF and other countries by now, if we go by that nonsense logic!

Its not possible to fix economy without reforms. With establishment backing and another 5 years. PTI hopefully with clear majority next time will finally do the hard work. First few years are always painful. Clowns like Dollar Dar left Pakistan bankrupt.

 

[Mav3rick]

Its not possible to fix economy without reforms. With establishment backing and another 5 years. PTI hopefully with clear majority next time will finally do the hard work. First few years are always painful. Clowns like Dollar Dar left Pakistan bankrupt.

This is the level of success of Imran Khan's illusion that even evidently educated people are still not able to look past the false façade, the mountain of lies and deceit and the never ending story of broken promises which were made just to get a catapult to the top! Moreover, that people are so blind by now they are unable to see how many finance ministers and secretaries have been changed in the past 3.5 years which is a glaring and damning proof of complete and utter failure which is also evident from the continuous decline in the quality of live of regular, middle class and lower middle class Pakistanis.

Infact, what to say of the situation when Shaukat Tarin, a person who could not even manage his Silk Bank, is made the Finance Minister and given the entire economy to manage!! Sometimes I wonder what hurts more, the current financial crisis effecting everyone including myself, or the sheer stupidity and ignorance of my countrymen who still support Imran Khan.

 

[ziaulislam]

My God!!! Does the IMF now know how superbly our economy is performing, how our remittances are increasing every month, how much our exports have increased magically, how our GDP is going up and PKR devaluation a routine matter, how inflation is at 13% and yet we are all happy and dandy and well off, how there is no more corruption and only the pure live in this land now, how cheap electricity, gas, petrol, medicine, food etc. is and how it can be taxed another 100%!!! how cheap the middle class vehicles are and how cheap the lower middle class bikes are, etc., etc., etc!

If in doubt, all the PTI Government has to do is send the clown @Norwegian and he can prove with his graphs how good the economy is doing...........infact, we might be in a position to give loans to IMF and other countries by now, if we go by that nonsense logic!

IMF knows that we need to act like bengaldesh and vietname not like asian tiger pakistan under nawaz sharif

Bengladesh PSDP is lower then pakistan per revenues higher? How come?
Their exports are higher how come

Firing of nawaz sharif by establishment was not only a big blow for pakistan but also across the world
Booting out our great leader led to release of COVID-19 but dishearted PMLN fan and thus covid -19 and global inflation today inflation cloacked at 7.6% in USA even though dollar overall appreciated further as compared to gobl currencies and USA is not oil dependent

Now given large deficit at external front and PTI utter failure to double exports in 3 years(rather then 40% increase in 3 years) will lead to further oressure on rupee more devlaution and more inflation

Had nawaz sharif been in govt we would have tackled external front pressure and rupee devalution by doubling our exports in just 2 years.

The failure at external front is clearly visible now

We lead our leader who was able to increase exports from 25b$ in 2012 to 21000 million in 2018 an almost 1000% increase

 

[hydrabadi_arab]

Another tough task is selling the new property valuation list to the provincial capitals whose opposition has already put more than $3 billion in loans in danger. These loans, committed by major donors, were tied to the new valuation in all the provincial districts. The harmonization of the Sales Tax regime for which the World Bank has already laid down a mechanism and a timeline that coincides with the upcoming budget is another serious issue.

This is quite stupid by provinces. First after 18th amendment they got 0 debt and majority share in tax collection. This alone should make them ready for some hard reforms as they are responsible for bankrupt federal govt.

This is why Pakistan cannot be run without establishment danda to pass bills in parliament. No wonder Pakistan is going to IMF since last 30 years.

 

[Mav3rick]

IMF knows that we need to act like bengaldesh and vietname not like asian tiger pakistan under nawaz sharif

Bengladesh PSDP is lower then pakistan per revenues higher? How come?
Their exports are higher how come

Firing of nawaz sharif by establishment was not only a big blow for pakistan but also across the world
Booting out our great leader led to release of COVID-19 but dishearted PMLN fan and thus covid -19 and global inflation today inflation cloacked at 7.6% in USA even though dollar overall appreciated further as compared to gobl currencies and USA is not oil dependent

Now given large deficit at external front and PTI utter failure to double exports in 3 years(rather then 40% increase in 3 years) will lead to further oressure on rupee more devlaution and more inflation

Had nawaz sharif been in govt we would have tackled external front pressure and rupee devalution by doubling our exports in just 2 years.

The failure at external front is clearly visible now

We lead our leader who was able to increase exports from 25b$ in 2012 to 21000 million in 2018 an almost 1000% increase

If you are trying to write something, I would advise to breathe in and breathe out during typing so that something makes sense to others.

 

[Mav3rick]

Its not possible to fix economy without reforms. With establishment backing and another 5 years. PTI hopefully with clear majority next time will finally do the hard work. First few years are always painful. Clowns like Dollar Dar left Pakistan bankrupt.

Perhaps Ishaq Dar was a clown but compared to him the PTI Finance Ministers have been devils, they have burned our economy to the ground and things will continue to get harder and harder until this hell bound PTI is gotten rid of. Not a single reform has been made and even micro decisions have been taken back after backfiring because the Economy has been given in the hands of crooks and criminals and is currently in the hands of a crook who could not even look after his own Silk Bank which he ran into the ground to the point where no other Bank is willing to acquire it (AlFalah and HBL both evaluated and walked away)!!!

 

[hydrabadi_arab]

Perhaps Ishaq Dar was a clown but compared to him the PTI Finance Ministers have been devils, they have burned our economy to the ground and things will continue to get harder and harder until this hell bound PTI is gotten rid of. Not a single reform has been made and even micro decisions have been taken back after backfiring because the Economy has been given in the hands of crooks and criminals and is currently in the hands of a crook who could not even look after his own Silk Bank which he ran into the ground to the point where no other Bank is willing to acquire it (AlFalah and HBL both evaluated and walked away)!!!

?? You have zero idea about economy. Otherwise you would know that N league burned down in 2018, just before they left. It will take some time for recovery.

 

[ziaulislam]

Perhaps Ishaq Dar was a clown but compared to him the PTI Finance Ministers have been devils, they have burned our economy to the ground and things will continue to get harder and harder until this hell bound PTI is gotten rid of. Not a single reform has been made and even micro decisions have been taken back after backfiring because the Economy has been given in the hands of crooks and criminals and is currently in the hands of a crook who could not even look after his own Silk Bank which he ran into the ground to the point where no other Bank is willing to acquire it (AlFalah and HBL both evaluated and walked away)!!!

Agree sir

We need to go back to subsidizng the rupee

Basically meaning to give anyone a free launch who wants to import something/do business

Its like claiming a pen is worth 100rs even if its true value is 50.

Leading to everyone buying a 50rs penand selling it to you on 100 (import floods)

This will cure inflation since the subsidy is given to rupee (we have arabs and chinese they will finance it)

?? You have zero idea about economy. Otherwise you would know that N league burned down in 2018, just before they left. It will take some time for recovery.

Any educated person know about economy
It isnt rocket science they teach us this in middle school

But ishaq dar policy of subsidizng rupee (using $$) does work in decreasing inflation(cheaper imports) and nomonal gdp numbers(since everything is measured in rupee value in $$ goes up)..

I mean you will need 20-30b$ to fund this endaevur (of rupee subsidizng) but that will come from the arabs