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IMF considers Pakistan economic teams deceitful, liars
ISLAMABAD: Pakistans former representative in the International Monetary Fund (IMF) board Dr Ehtisham Ahmad Monday disclosed that a last moment favour by the White House helped Pakistan gain $11.3 Stand-by Arrangement in 2008 with the IMF, which initially turned down Pakistans request saying the economic managers lied on tax reforms, a perception that has now become reality in 2010-11.
Now after two-and-half-year the IMF considers the economic policymakers cheaters and liars, said the former official. He was addressing a seminar on Urgency of Tax Reforms-The challenge to the Macroeconomics Situation and Development organised by the Institute of Development Economics and Alternatives, known as IDEAs, funded by the Open Society Foundation of New York.
IMF has had very low opinion about Pakistan that became a reason for initially refusing the bailout programme, sought to avoid defaults on international payments. The White House had to intervene (to secure a programme for Pakistan) as even the friends on the IMF board said Pakistans economic team lied on the promise of levying (the value-added tax).
He said the 2008 programme was approved on a plan prepared by Finance Secretary Dr Waqar Masood and the key element of Masoods plan was that Pakistan would finally address the domestic resources mobilisation issue and generate additional tax revenues equivalent to 1.0 percent of the total national income for consecutive three years The IMF wanted Pakistan to enhance tax to gross domestic product (GDP) ratio to 14 percent from the lows of 9.0 percent till 2013 and reduce the budget deficit to 3.0 percent of the total size of the economy. And after two-and-half-year the programme is suspended due to failure in implementing tax reforms and we are standing nowhere. Dr Ahmad said it would not be easy for Pakistan to have another bailout programme with tainted reputation. It is now a different IMF that will seek prior implementation of conditions before agreeing to a new programme.
He said even the Kerry Lugar money is not coming without the IMF Letter of Comfort. On a question whether the US can tide the new loan programme with North Waziristan operations, he said North Waziristan could be an American card, but now even the US has been finding it very hard to convince the IMF to release the withheld tranches.
He said the Federal Board of Revenue (FBR) opposed the value-added tax implementation, as it also would have taken away the FBRs powers to issue Statutory Regulatory Orders, which is an important tool for maintaining cozy relations with individual companies. He said the general sales tax has mutilated over 10 years by the FBR, which has traditionally known for rent seeking. He said SRO 283 that reduced the sales tax rate on textile, carpets, leathers, surgical and sports goods from 17 percent to 4 and 6 percent, is an April fool gift to the nation by the FBR. He said the SRO 283 has killed the tax reforms. He said the 7th National Finance Order was on an assumption of the VAT implementation and now without VAT this and the successive governments will be in jeopardy. Now the unfunded devolution has put the 18th Amendment under risk. Dr Ahmad said the government should disband the inefficient and corrupt FBR and form another agency on the model of the central bank. He said to minimise the gap between expenditures and income. The government should levy wealth tax at district levels. The colonies like Clifton, Gulburg, Raiwand and GOR would be taxed in the new budget. He said the government should consolidate corporate income tax and also tax all incomes irrespective of source. Windows of opportunity are fast closing on Pakistan due to the credibility issue, said Dr Faisal Bari, a renowned economist. He said the government should tax all the sectors irrespective of size of revenue to ensure equity of tax.
Daily Times - Leading News Resource of Pakistan
ISLAMABAD: Pakistans former representative in the International Monetary Fund (IMF) board Dr Ehtisham Ahmad Monday disclosed that a last moment favour by the White House helped Pakistan gain $11.3 Stand-by Arrangement in 2008 with the IMF, which initially turned down Pakistans request saying the economic managers lied on tax reforms, a perception that has now become reality in 2010-11.
Now after two-and-half-year the IMF considers the economic policymakers cheaters and liars, said the former official. He was addressing a seminar on Urgency of Tax Reforms-The challenge to the Macroeconomics Situation and Development organised by the Institute of Development Economics and Alternatives, known as IDEAs, funded by the Open Society Foundation of New York.
IMF has had very low opinion about Pakistan that became a reason for initially refusing the bailout programme, sought to avoid defaults on international payments. The White House had to intervene (to secure a programme for Pakistan) as even the friends on the IMF board said Pakistans economic team lied on the promise of levying (the value-added tax).
He said the 2008 programme was approved on a plan prepared by Finance Secretary Dr Waqar Masood and the key element of Masoods plan was that Pakistan would finally address the domestic resources mobilisation issue and generate additional tax revenues equivalent to 1.0 percent of the total national income for consecutive three years The IMF wanted Pakistan to enhance tax to gross domestic product (GDP) ratio to 14 percent from the lows of 9.0 percent till 2013 and reduce the budget deficit to 3.0 percent of the total size of the economy. And after two-and-half-year the programme is suspended due to failure in implementing tax reforms and we are standing nowhere. Dr Ahmad said it would not be easy for Pakistan to have another bailout programme with tainted reputation. It is now a different IMF that will seek prior implementation of conditions before agreeing to a new programme.
He said even the Kerry Lugar money is not coming without the IMF Letter of Comfort. On a question whether the US can tide the new loan programme with North Waziristan operations, he said North Waziristan could be an American card, but now even the US has been finding it very hard to convince the IMF to release the withheld tranches.
He said the Federal Board of Revenue (FBR) opposed the value-added tax implementation, as it also would have taken away the FBRs powers to issue Statutory Regulatory Orders, which is an important tool for maintaining cozy relations with individual companies. He said the general sales tax has mutilated over 10 years by the FBR, which has traditionally known for rent seeking. He said SRO 283 that reduced the sales tax rate on textile, carpets, leathers, surgical and sports goods from 17 percent to 4 and 6 percent, is an April fool gift to the nation by the FBR. He said the SRO 283 has killed the tax reforms. He said the 7th National Finance Order was on an assumption of the VAT implementation and now without VAT this and the successive governments will be in jeopardy. Now the unfunded devolution has put the 18th Amendment under risk. Dr Ahmad said the government should disband the inefficient and corrupt FBR and form another agency on the model of the central bank. He said to minimise the gap between expenditures and income. The government should levy wealth tax at district levels. The colonies like Clifton, Gulburg, Raiwand and GOR would be taxed in the new budget. He said the government should consolidate corporate income tax and also tax all incomes irrespective of source. Windows of opportunity are fast closing on Pakistan due to the credibility issue, said Dr Faisal Bari, a renowned economist. He said the government should tax all the sectors irrespective of size of revenue to ensure equity of tax.
Daily Times - Leading News Resource of Pakistan
