ISLAMABAD: Just a day after the announcement of the budget, a $1 billion foreign loan has been received by the country, newly-minted Finance Minister Miftah Ismail announced during a post-budget press conference on Saturday.

He reiterated his commitment that there is no need for another bailout package from the Inter­national Monetary Fund (IMF).

A senior official later told Dawn that the $1bn loan was received from a Chinese bank and would be due for repayment in three years. He declined to share details quoting confidentiality clauses of the loan agreement.

The minister said the inflow suggested that Pakistan’s foreign exchange reserves would be higher in June 2018 than those at present with more loans to follow. Hence, there would be no need for an IMF programme in the near future based on assumptions that lag impact of two currency devaluations on rising exports, recent duties on luxury imports and improving remittances would address gaps in current account deficit, his cabinet colleague Haroon Akhtar Khan chipped in.

Plans to contest polls

The unelected minister said he would contest National Assembly elections from NA-253 Karachi that has been divided into two constituencies — NA-242 & 243 — though Prime Minister Abbasi had asked him to contest from both constituencies.

Defending the budgetary measures as “realistic”, he said they were finalised after a marathon 12-hour scrutiny by Prime Minister Shahid Khaqan Abbasi while claiming that most of the estimates were very conservative including 6.2 per cent economic growth rate and about 11pc growth in taxes envisioned for next year.

$1bn Chinese loan received a day after budget announcement

He said most expenditures in the budget had been programmed “realistically” since previous budgets were marred by strong expenditure overruns. “This time we have included the overruns in the actual expenditures” including those pertaining to allocations for defence “to ensure that no supplementary grants will be necessary next year,” he said.

Maximum levy

Under the finance bill 2018-19, the government has hiked up petroleum levy to Rs30 per litre on all oil products from existing Rs10 on petrol, Rs8 on high-speed diesel, Rs6 per litre on kerosene and Rs3 per litre on light diesel oil. The increased rates are estimated in the federal budget to generate up to Rs300 billion during next fiscal year compared to actual receipts of Rs170 billion this year.

Mr Miftah said the provision did not mean that tax rates would be actually increased. In fact, he said, the government was actually collecting maximum petroleum levy on all products permissible under the law and had given flexibility to the next government to raise the levy when international prices go down to top up its revenues.

Asked as to why he believed the interim government would not allow full implementation of the tax rates when the 2018-19 finance bill comes into force on July 1, the minister said: “Nobody wants a bad name.” He said the revenue projections for the next year petroleum prices were based on existing oil prices.

Adviser to the prime minister on revenue Haroon Akhtar said a committee was being set up under the chairmanship of Senator Ilyas Bilour and comprising representatives from the four provinces, Gilgit-Baltistan and Azad Jammu and Kashmir to address tax-related anomalies. He said the alternative dispute resolution (ADR) forum would be headed by a retired judge and comprising major chambers of commerce and industries and on the demands of the business community its decision would be binding on the Federal Board of Revenue unlike the previous set-up where it could only make recommendations.

Mr Akhtar said the tax system had been simplified and the salaried class would be required to submit a one-page return. At the same time, non-filers of tax returns would continue to pay extra cost in bank transactions and would not be able to purchase properties above Rs4 million.

Responding to a question on substantial power sector debt circular debt, Mr Haroon said it should be appreciated that PPP government was paying about Rs250bn per annum of power subsidy, but the circular debt built up to the level of Rs500bn. In contrast, the present government had scaled down subsidies to about Rs100bn and circular debt would be no more than an acceptable level Rs350bn when the current government would complete its term, he added.

In reply to another question, Mr Miftah said the federal government had given a number of incentives and packages for Karachi including Green Bus track and major water projects.

Published in Dawn, April 29th, 2018