ISLAMABAD: With Rs3.5 trillion worth of tax cases pending in courts, the National Assembly’s Standing Committee on Finance and Revenue on Wednesday cleared a bill to amend the Fiscal Responsibility and Debt Limitation Act (FRDLA).

However, it blocked another bill to relax procurement rules for public sector entities (PSEs) over fiduciary concerns.

The meeting presided over by PTI’s MNA Faiz Ullah unanimously approved “The Fiscal Responsibility and Debt Limitation (Amendment) Bill 2021.

A senior official of the Ministry of Finance briefed the committee that FRDLA 2005 provided for the reduction of federal fiscal deficit and ratio of public debt to GDP to a prudent level by effective public debt management. The Debt Policy Coordination Office was also established under this act. The amendment bill will strengthen the Debt Office with the mandate and resources for effective planning and execution of debt management functions of the government.

Bill proposes total public debt and guarantees at 70pc of GDP

The panel was told that government guarantees stood at 6pc of GDP and the total stock of the public debt at 72pc of GDP at present. The bill sought to increase the limit on the stock of outstanding guarantees to 10pc of GDP. Likewise, the limit on the stock of the total public debt and guarantees was proposed at 70pc of the GDP in the new bill.

He informed that the Bill proposed to bring overall debt to GDP ratio to 60pc in six years after the fiscal year 2020-21 as it envisaged the target to decrease debt to GDP ratio by 2pc annually and outstanding guarantees to 10pc of GDP. It was explained that the law also provided room for loans in case of an increase in expenditure so that the system can continue to function.

The committee deferred “The State-owned Enterprises (Governance and Operations) Bill, 2021”, “The Covid-19 (Prevention of Smuggling) Bill, 2020” and “The Tax Law (Third Amendment) Bill, 2021” till its next meeting because of divergent views of the members.

Federal Board of Revenue chairman Dr Ashfaq told the meeting that about Rs3.5tr worth of revenue was stuck up because of court cases, including Rs300bn worth of customs cases. He said a number of people had filed the cases in various courts taking advantage of Article 199 of the Constitution.

He said many cases pertained to the valuation of goods where goods clearance used to be allowed against corporate guarantees instead of bank guarantees. The traders then secured stay orders from courts against such corporate guarantees. Therefore, the corporate guarantees had now been excluded from the law and only bank guarantees were acceptable.

While discussing the SOE law, the members were opposed to allowing all the SOEs to have their own procurement rules and insisted that there should be flexibility in certain cases but more than 300 SOEs could not be given free hand. The committee was generally of the view that SOEs board of directors should have representation from the members of the national assembly and the senate on the recommendations of speaker and chairman of the respective houses.

Syed Naveed Qamar of PPP and Ahsan Iqbal of PML-N had divergent views onboard members of the SOEs.

Mr Iqbal said the private members should have at least 10-year experience in the relevant field and should be 100pc Pakistani citizens. Mr Qamar, however, said Pakistanis living abroad should not be suspected in such matters.

Published in Dawn, February 17th, 2022