ISLAMABAD: Minister for Finance Ishaq Dar said on Saturday that the government would introduce a bill to have access to offshore companies.
He said that Pakistan would become a member of the Convention on the Organisation for Economic Co-operation and Development (OECD).
He said that after achieving economic stability, the focus of Budget 2016-17 would be on improving economic growth by prioritising the agriculture sector’s development and promotion of exports.
The finance minister stated this while addressing a crowded post-budget press conference here at the P-Block Auditorium.
He was flanked by Adviser to the Prime Minister on Revenues Haroon Akhtar, Special Secretary to the Finance Ministry Dr Shuja Ali, Secretary Finance Dr Waqar Masood Khan, Chairman Federal Board of Revenue (FBR) Nisar Muhammad Khan, Additional Secretary Finance Tariq Mehmood Pasha and senior officials of the Ministry of Finance.
Ishaq Dar said that the two sectors which needed a boost for the promotion of the country’s Gross Domestic Product (GDP) were agriculture and exports.
He said that agriculture provided employment to 45 percent of the labour force and 70 percent of the population was dependent on it while its share in the national GDP was about 21 percent, adding that the negative growth of 0.19 in this sector and a 28 percent reduction in cotton production did affect overall growth rate.
He said that the provision of relief to the agriculture sector was the top-most priority of the government so in the budget-2016-17 the prices of urea fertilizers had been reduced by Rs400 per bag from Rs1,800 to Rs1,400 while the prices of DAP had also been cut from Rs2,800 to Rs2,500 providing Rs300 relief to the farmers.
He said the agriculture package announced in the federal budget was devised in consultation with the farmers’ representatives, chambers of commerce and other stakeholders.
He said that sales tax on pesticides had also been zero rated while the per unit electricity charges for tubewells had been reduced from Rs8.85 plus sales tax to Rs5.35 adding that the provinces had been requested to adjust sales tax keeping in consideration the provision of relief to farmers.
Regarding a question on total foreign debt, the minister clarified that the current government had received total debt of $15.5 billion out of which an amount of $10 billion was paid back so the net amount of debt received by the current government was $5.5 billion.
The minister said that the second priority sector for boosting growth was the promotion of exports.
He said that due to the fall in commodity prices in the international market, exports from the county witnessed a decline in terms of cost. However, the exports of different commodities increased in terms of quantity.
He said that Pakistan was aiming at enhancing the ratio of exports to GDP which was about 15 percent or $45 billion in the emerging economies.
He said that five export sectors had been zero rated while the refunds up to April would be cleared off by August 31, 2016. He said that the exports refinancing had also been reduced to as low as 3 percent to facilitate exporters.
Ishaq Dar said that investment to GDP had increased from 12.6 percent of GDP to 15.6 percent which would be further enhanced to 21.22 percent to ensure 7 percent growth.
He said that the industrial sector had performed well adding that the government also provided incentives for this sector.
The duty on capital goods and machinery had been reduced, he added.
Highlighting the medium-term goals for 2016-17, the finance minister said that under the plan, GDP growth would gradually rise to 7 percent by FY-2018-19, inflation would be contained to single digits, the investment to GDP ratio would rise to 21 percent, the medium term fiscal deficit would be brought down to 3.5 percent of GDP, tax to GDP ratio would be increased to 13.9 percent while foreign exchange reserves would reach $30 billion.
The services sector and promotion of IT and agricultural credit was also the focus of the government, he added.
Ishaq Dar said that FBR revenues had recorded an increase of merely 3.38 percent in the financial year 2012-13 when collections stood at Rs1,946 billion adding that for the current financial year 2015-16 the target of Rs3,104 billion had been fixed and considering the collections to date this target would be achieved.
In this way, tax revenues would be increased by 60 percent which would be a historic increase, he remarked.
He said that the tax to GDP ratio of FBR taxes that was 8.5 percent of GDP in FY 2012-13 had now been increased to 10.5 percent in FY 2015-16. The fiscal deficit, he said, was 8.2 percent of GDP in FY 2012-13 which was being brought down to 4.3 percent of the GDP in FY 2015-16. He said that revenues had also witnessed a record growth adding that the government had rolled back the concessionary SROs, however, concessions for charity organisation would be maintained.
He said the Public Sector Development Programme (PSDP) of Rs800 billion for the federal component and Rs875 billion for the provincial component would help promote development in the country.
He said that 7 percent GDP growth enhancement in the per capita income creating job opportunities enhancing average life expectancy, poverty alleviation and reducing inflation to single digits was the ultimate target of the government.
Ishaq Dar said the country had to bear Rs118 billion loss due to the war on terror going on in Pakistan since 9/11. “We are now in the final phase of operation Zarb-e-Azb and it is hoped that soon we will get rid of terrorism which will help in further increasing Foreign Direct Investment (FDI) in the country,” he said.
During the current year, about Rs6 billion loss was incurred to the country due to the war on terror compared to the loss of Rs10 billion last year, he added.
He informed that in the budget 2016-17 there was 7 percent increase in non-development expenditure.
Regarding the raise in salaries of the federal employees, the minister clarified that two adhoc allowances of 2013 and 2014 would be merged first in the basic pay and then a further 10 percent of the total basic pay would be given as adhoc relief allowance.
Thus there would be a net impact of approximately 13-14 percent increase, he added.
He hoped that the budget 2016-17 would help increase overall economic growth in the country and would give relief to the common people besides creating job opportunities and helping poverty reduction.
During the question answer session the finance minister said that prime minister this year had announced a Rs341 billion Kissan package.
He said a number of reliefs had been given to farmers in the budget 2016-17 adding that the volume of the target of agriculture credit had been increased from Rs600 billion to Rs700 billion thus increasing Rs100 billion agriculture credit in FY 2016-17. He said that the total impact of the reduction in prices of urea and DAP fertilizers would be Rs45 billion while reduction in the electricity price for agricultural tubewells would impact Rs6 billion.
To a question, Ishaq Dar said despite increase of petroleum prices in the international market, the government announced to keep the prices unchanged for June and for this purpose a huge cut in sales tax was made in all products, he added.
He informed that now the sales tax of 4 of 5 products was under 17 percent and the government had to bear an additional cost of Rs8.5 billion in this regard.
Regarding the question of total foreign debt, the minister clarified that the current government had received total debt of Rs15.5 billion out of which an amount of Rs10 billion was paid back so the net amount of debt received by the current government was Rs5.5 billion.
He informed that in July this year, the Pakistan stock exchange was likely to be accepted by the international stock market as a frontier market.
To a question, Dar said exports would be increased to Rs35 billion which would not only help in reducing dependency on foreign institutions but the current account deficit would also be reduced to zero or would go in surplus.
He hoped due to measures taken by the government, they would be able to produce 20 million cotton bales which would give a boost to the agriculture sector in the country.
He said the government was all set to launch the Pakistan Micro-finance Company which would have the potential of providing micro-finance facilities to 25 million people and would also help in the creation of 300,000 new jobs.
Moreover, he said when the country’s economic growth would cross 7 percent, a huge number of new jobs would also be created due to the increase in economic activities in the country.
To another question, the finance minister said due to the new tax measures proposed by the government for the fiscal year 2017, there would be a net impact of Rs148 billion.