With the newly-elected government of PML-N chief Nawaz Sharif set to takeover the reigns in around a fortnight’s time, the caretaker regime is hectically involved in nursing the bleeding economy to facilitate the process of budget making – the biggest challenge awaiting for Nawaz.
A well-placed source in the Ministry of Finance told Pakistan Today that Adviser to PM on finance Dr Shahid Amjad Chaudhry was spearheading a drive to streamline the economic matters so as the next government could be facilitated in the budget-making process.
“Though the caretaker prime minister and his team are set to leave in about two weeks, but like true patriots, they are involved in hectic efforts to prepare ground for the newly-elected government in managing the budget-making process. In this regard, some drastic steps have already been taken while some proposals have also been laid down,” the source added.
Loan repayment to IMF & new loans:
“The adviser on finance has also been involved in ensuring front-loading of the loan payment so as the new government could also negotiate for new loan on low mark-up and on easy instalments,” the source said.
The source said that the adviser had already paid a visit to the US recently where he had gone to attend the annual meeting of the International Monetary Fund. Besides, the adviser also held talks with the IMF on the sidelines of the moot, seeking some concessions for Pakistan in loan repayment. He also held meetings with heads of international financial institutions and delegations.
“The initiative aims at facilitating the new government in loan repayment and holding negotiations for new loans on low markup as was done by the PPP government in year 2008. This would greatly help build the economic strength”.
Streamlining subsidies in energy sector:
The source added that the finance adviser was also involved in streamlining the finances related to energy sector, adding that subsidies for energy sector were being streamlined and rather than blanket subsidies, targeted subsidies were being proposed.
“One of the proposal being made is that the provincial governments should generate their own electricity. Moreover, measures are also being adopted to plug the line losses and other leakages in the power sector to save energy,” the source added.
The source added that the adviser had also directed the revenue department to take drastic steps that guarantee increase in revenue collection. “The ministry has taken some new measures to expand the tax net. We hope that this would greatly help the new government,” the source added.
Lowering fiscal deficit:
The source added that the focus of the adviser on finance was making hectic efforts to bring down the fiscal deficit to five or 5.5 percent that would greatly help the new government. Moreover, Prime Minister Mir Hazar Khan Khoso had already launched an austerity campaign to save energy by banning the use of air conditioners in offices and official residences of the bureaucracy.
Former finance minister Dr Salman Shah opined that negotiations with the IMF were of paramount significance keeping in view the economic mess and transparent measures may not help to a great extent.
“Foreign funding is a must for the new government. So they would have to go to the IMF,” Shah said.
He said the paralysed economy needed immediate attention by the new prime minister and the new government would have to plug loopholes in tax collection system and exemptions would have to be removed forthwith.
“I think the government would have to improve the tax collection system and taxation should be made mandatory across-the-board,” he said, adding that transparency in financial matters was mandatory.
“I think IMF should be the immediate stopover for the new government and the new PM would also have to initiate dialogue seeking some review in balance of payments. If new loans are not received and instalments are not paid on a regular basis, the new government may face a financial crisis as the foreign exchange reserves are not for more than four months,” he added.