Finance Minister said the revised budgetary measures would improve national economy and give a positive signal to the international community. — File Photo

ISLAMABAD: The Rs173 billion additional budgetary measures through Rs120 billion reduction in allocated expenditures and Rs53 billion additional taxes have come about with full cooperation and belt-tightening of the armed forces and other government institutions, according to Finance Minister Dr Abdul Hafeez Shaikh. Speaking at a “post-mini-budget” news conference on Wednesday, the minister said the economic reforms process would continue to stabilise economy and extend its benefits to people while the reformed general sales tax would become part of next year’s budget.

He said the revised budgetary measures would improve national economy and give a positive signal to the international community, including the International Monetary Fund and other multilateral institutions, but declined to say if the steps would pave the way for disbursement of IMF funds.

Dr Shaikh said last year’s National Finance Commission award resulted in transfer of Rs300-400 billion additional revenue to the provinces during the current financial year which reduced federal government’s fiscal space, resulting in further expenditure controls.

Responding to a question, he said the introduction of new tax measures through presidential ordinances was in no way a violation of the Constitution as described by the PML-N. An ordinance is as good as an act of parliament and the Constitution provided for promulgation of ordinance in special circumstances. Nevertheless, the ordinances would be taken to parliament, he said.

He blamed successive governments for their ‘historic and collective’ failure to mobilise domestic resources, which resulted in dependence on foreign loans and excessive borrowing from the State Bank of Pakistan and raised more risks to the economy like higher inflation.

The minister said that by the end of last month the borrowing from the central bank had been brought down to Rs80 billion while a boom in international prices of wheat, rice, sugar and cotton had resulted in much better returns in the form of exports, which were expected to cross a record $24 billion mark during the current fiscal year.

He said the remittances from overseas Pakistanis were expected to exceed $11 billion, highest in the country’s history, while foreign exchange reserves at $17.5 billion were also a record.

Dr Shaikh said the coalition partners had supported the government in taking difficult economic decisions to control expenditures and increase resources.

Finance Secretary Dr Waqar Masood Khan said the government had cut the expenditure by Rs120 billion, including Rs100 billion reduction in public sector development programme. An amount of Rs20 billion would be saved through a combination of steps, including a ban on fresh recruitments on posts for which budgetary allocations had been made and a ban on the purchase of durable goods like air-conditioners, furniture, computers, etc.

He said the supplementary grants from all institutions, including the armed forces, had been controlled and in the process no institution was spared and even the army had cooperated.

Federal Board of Revenue chairman Salman Siddique said the Rs1,667 billion revenue target under the federal budget was based on the premise of 4.5 per cent growth and introduction of value-added tax, but the VAT could not be implemented and growth was estimated to have been affected by 2 to 2.5 per cent because of floods.

As a result, the normal tax collection should have been Rs1,510 billion, but Rs90 billion worth of taxes were required to be generated to meet a revised target of Rs1,600 billion. He said the FBR would try to yield Rs1,630 billion in revenue, but a conservative collection of Rs1,600 billion was a must.

He said that Rs37 billion would be generated in outstanding recoveries through audit and speedy perusal of court cases, while new taxes of Rs53 billion would be collected, including 15 per cent surcharge on income tax liability and 1.5 per cent increase in special excise duty on fertilisers, pesticides and tractors, besides withdrawal of sales tax exemptions on plant, machinery and equipment and withdrawal of zero-rating of domestic sales of textiles, leather, carpets and sports & surgical goods.