Recorder report

ISLAMABA: The Intern-ational Monetary Fund (IMF) may press Pakistani authorities to include payment of outstanding sales tax and income tax refunds of over Rs 200 billion through promissory notes in the fiscal deficit.

This was stated by former finance minister and noted economist Hafiz Pasha while speaking at Aaj TV programme ‘Paisa Bolta Hai with Anjum Ibrahim on Saturday. He added that if IMF presses for the inclusion of promissory notes in the fiscal deficit as condition for the new programme, fiscal deficit for the ongoing fiscal year will increase to an unsustainable level.

Pasha further stated that after the announcement of the second amendment to the finance bill 2019, negotiations with the IMF will become difficult as measures announced in the economic package were contrary to expectations.

He said that everyone was expecting that this (package) will unveil measures dealing with the fiscal deficit after it touched a historic high of Rs 1 trillion in the first six moths of the current fiscal year.

Pasha said if this trend continues the fiscal year would close with a deficit of Rs 2.7 trillion and added that the economic package announced Wednesday entails a danger of increasing the twin deficits – budget and current account.

The government’s approach in the package is based on providing some incentives to various sectors to boost subdued industrial and agriculture growth but the danger is that this will increase the twin deficits – fiscal deficit and current account deficit – Pasha said, adding that incentives would cost Rs 140 billion in terms of revenue to the government.

There is no well defined strategy to deal with the State Own Enterprises (SOEs) deficit, which has crossed over Rs 1.4 trillion.

The government, Pasha maintained, might survive another five months as far as balance of payment issue is concerned with the help of friendly countries but the question is whether friendly countries would continue their help next year as well.

Pasha also suggested the government seeks approval of planned big projects by foreign investors from Parliament with the purpose of removing any shortcomings in the agreements leading to litigation as was the case of Karkey and Reko Diq.

About proposed provision in the Federal Board of Revenue law with respect to provisional assessment of off shore assets, former Finance Minister stated that provision must be debated thoroughly in parliament to ensure penalty on those who had taken money abroad. The government must take those to task who had taken money aboard to discourage this practice in the future, Pasha concluded.