Asad Umar says will only take IMF’s money, not dictation

Finance Minister Asad Umar on Wednesday defended the recent hike in power and gas prices, devaluation of rupee and increased taxation as a part of necessary measures to bring the country out of economic crisis.

In an interview with BBC’s Stephen Sackur, the finance minister said, “Both the monetary policy and the fiscal policy have been moving in the very direction of the reforms that are needed. We don’t need IMF to dictate us for us to do that, because we believe this is what’s necessary.”

“We have not waited for the IMF to come to us, and tell us what we need to do for our own economy or impose any sanctions on us. We have done that without the IMF’s assistance,” he went on to add.

Speaking about the country’s economic situation, the finance minister added, “The real challenge and the real issue here is, (something that we will be judged on in the future), did we take the right decision in setting the economy on a path to the last IMF programme that the country will ever have to take?”

On the current course of action, he further stated, “A very clear direction has been set. Pakistan now has a very clear strategy, [unlike before] which was consumption-led imported capital finance that has repeatedly put the country into these economic issues. Until we move Pakistan towards domestic resource mobilisation, productivity-led, export-oriented economy, we will not be able to move out of this begging-bowl syndrome”.

Pakistan has sought another bailout from the IMF amid faltering economy and talks between the two sides haven’t yielded any results as of now. Along with the Fund, the country has approached its allies, China and Saudi Arabia, for financial bailout.

Defending the move, Umar stated, “By the time the government came into power, it was well known that the country needed an economic bailout… And this is something that is not to be proud of. So if he [Imran Khan] has to do it, he is ashamed of it, but that is what we have to do.

Pakistan, on November 19 received the first tranche of $1 billion from Saudi Arabia under the $6-billion financial package aimed at stabilising the fast-dwindling foreign currency reserves. Earlier, the reserves had contracted fast and dropped to a four-and-a-half-year low of $7.48 billion by November 9, 2018, according to the State Bank of Pakistan (SBP).

MASSIVE REFORMS FOR TAXATION:

After refuting claims about certain people in the country being unhappy about the CPEC project, Umar claimed that revenue generation has been at the core of financial reforms that the PTI government has developed.

Speaking about taxation, Sackur remarked that only 800,000 Pakistanis out of a population of more than 200 million pay any significant tax. He added while directing his question to Umar, “If you are going to change the amount of taxation received, it’s going to require the most massive reform.”

Umar, in his reply, stated, “Those are the very reforms that we have been working on despite the severe balance of payments crisis. The revenue generation aspect is absolutely central to be able to deal with the horrendous challenges that we are facing”.

Over the lack of revenue generation in the past, the finance minister remarked, “We need the revenue authority to be fixed. We have separated tax policy from tax administration, which is central to the reform effort.”

Referring to the Federal Board of Revenue (FBR), Umar continued, “Almost the entire administration of the tax authority has been changed. We have also made changes in law, which allow the application of modern technology, use of data analytics, algorithms, to figure out where tax-evasion is taking place, who is evading taxes. We have developed a list of high net-worth individuals who have been found evading taxes. 3001 of them have already been issued notices because we want to make an example out of them.”