KARACHI – The Federal Finance Minister Dr Abdul Hafeez Sheikh has warned against ‘partisanship’ on issues critical to national interest, while the government is determined to develop political consensus over “difficult economic decisions” including reformed General Sales Tax (GST) to fulfill its commitment with the International Monetary Fund (IMF). He stated that the PPP-led government would opt for “other steps” to mitigate the immense politico-financial pressure, currently faced by Islamabad if coalition partners do not agree on reforming the country’s 18-year-old GST system.
“We should not allow partisanship to overcome the country’s economy. We don’t allow politics to defeat economics,” Federal Finance Minister Dr Abdul Hafeez Sheikh said before formally inaugurating the much-awaited leverage product, Margin Trading System (MTS), at the Karachi Stock Exchange on Saturday. The finance minister said that the government was trying to increase its “domestic assets” to cater needs of people’s development and by reforming the 18-year-old tax system. “Reformed GST going through finance committees of the Senate and the National Assembly would come for voting in the Parliament for passage.”
According to the finance minister, negotiations, to develop political consensus on the proposed reformed GST, with the IMF and government’s coalition partners were in process. “Other steps would have to be taken that are under consideration and would be revealed on appropriate time as we can’t wait for this political consensus for too long,” the finance minister maintained. The federal minister said that the government was working hard to increase size of the economy by bringing haves into the tax net and by eliminating general subsidies.
“It is unfair that those driving BMWs receive the same subsidies on petroleum prices like other deserving people,” the finance minister lamented. Dr Hafeez, terming the devastating floods and soaring international oil prices as two major challenges, said Islamabad was to balance its revenues and expenditures in line with its international commitments with the IMF. “The federal government, besides freezing its expenditures, has asked provinces to control their expenses,” he added. Dr Hafeez said that only “difficult economic decisions” through political consensus could help Pakistan say no to more external and internal loans that, if not avoided, would further burden the ailing economy.
“We succeeded in holding fiscal deficit at 2.9 percent during the first half (of FY2011) and are trying to arrest it at five percent in the second half,” the minister told the media. Seeing the increasing worker remittances and exports as “good signs”, Dr Hafeez said the country’s receipts, under the two heads, would cross the historic level of $11 billion and $22 billion, respectively. The government was trying to attain greater access for Pakistani exports in the European and other international markets, he said.
He said Pakistan, having a dependent economy, was set to face the crunch of a possible increase in international oil prices that had crossed $100 a barrel on the back of high demand from emerging economies and political unrest in the oil-rich Middle East. Regarding impact of the three leveraged products, Margin Trading System (MTS), Margin Financing System (MFS) and Securities Lending and Borrowing (SLB), the federal minister maintained that these would be helpful in increasing volumes at local capital market.
Inviting budget proposals from the capital market players, also called as the “engine of growth” by the minister, he said the government would ensure that the new budget is business-friendly, demutualisation is promulgated soon and the debt market is developed.
Finance minister warns against partisanship on national issues
