Subsidy on petrol, gas, power to go, says Tarin

[LahoreEstate]

Monday, June 01, 2009
KARACHI: Adviser to the Prime Minister on Finance Shaukat Tarin has said the government has decided to withdraw the subsidy on petroleum, gas and electricity ahead of 30 days under an agreement reached with the International Monetary Fund (IMF).

Tarin was addressing a conference held here on Sunday titled “Economy of Pakistan and role of the IMF” and later talking to journalists.The IMF had to be approached due to the deteriorating economic situation, but now the economy was depicting a rosy picture, he remarked.

Tax to GDP ratio had fallen due to the non-extension of the tax net to certain vital sectors and efforts were being made to increase the tax to GDP ratio from 9.6 to 16 per cent in the next five years, he said. The government would bring four major sectors under the tax net, he announced. These include real estate, stock market, agriculture and services sectors, he said.

The number of taxpayers stood at 3.4 million in the country, which was minimal for a population of 160 million. Therefore, it had been decided to broaden the tax net, he added. He said the government was working on a nine-point GDP growth rate agenda. The government had borrowed Rs 58 billion from the State Bank in the last month and paid back a loan amounting to Rs 200 billion so far, he said.

The government was spending Rs 200 billion every year to meet the loss being caused by public sector entities, including PIA, Railways and Steel Mills, he said. Had this amount been spent on the energy sector, the country would have not faced any power crisis, he added.

The adviser indicated that the revenue target had been set at Rs 160 billion, and foreign exchange reserves had surged. Pakistan had agreed on the steps with the IMF aimed at alleviating poverty, he said. The IMF had demanded that interest rate be increased by 3.5 per cent, he added.

Regarding inflation, he told the gathering it would range between 13 to 14 per cent. More powers were being delegated to the State Bank of Pakistan enabling it to take action against the banks, he said.

Responding to a question, he said work was being done on the National Finance Commission Award. A meeting of the NFC would soon be held, and the NFC award would be announced in consultation with provinces, he further said.

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