Finance Minister Shaukat Tarin said on Friday that he believed the energy sector to be the government’s “Achilles heel”, and it would take at least five to seven years to resolve the issues the sector was facing.
Addressing businessmen at the Overseas Investors Chamber of Commerce and Industry, he said the government was trying to fix the problems the sector faced today, even though these were not a consequence of the actions of the incumbent government.
“Excessive [electricity generation] capacity has been built and we will have to consume that electricity,” he added, estimating that it would take at least five to seven years to use the excessive electricity.
Tarin’s remarks were in line with those of other Pakistan Tehreek-i-Insaf leaders, who blame previous governments for launching electricity projects that were not necessary.
Reiterating the allegation, Tarin pointed out that the excessive capacity for electricity generation continued to build to this day, as various projects had been launched and could not be stopped midway.
“So there will be a time lag [in addressing the issues faced by the energy sector] and there will be a strain on us,” he said, stressing that within five to seven years, “we have to get some reprieve”.
The finance minister, however, assured that the energy minister and his team were trying their best to address the problems and that policy decisions in this regard would be taken in the coming few months.
Focus on planning
Tarin further stated that the Economic Advisory Council, an economic advisory body, had devised plans for 14 areas — something that had been missing in Pakistan’s economic sector for the past many years.
“After 1972, planning was abandoned [when it came to] Pakistan’s economy as the Planning Commission was dismantled,” he lamented. And since there was a lack of long-term and medium-term plans, the policies were not effective and focused, he added.
Tarin said Prime Minister Imran Khan would be briefed on the progress of those plans in monthly meetings.
He added that a cell would also be established in the finance ministry and the help of analysts from the Pakistan Institute of Development Economics would be sought to organise the meetings.
Broadening the tax base
The minister added that steps had also been taken to broaden the tax base with the help of technology.
He said data of taxpayers, and even unregistered voters, had been collected from various sources and the authorities could now tell with 80 per cent to 90pc accuracy the income level of those individuals and how much tax they had to pay.
Tarin added that since there was a perception and complaints of the Federal Board of Revenue harassing taxpayers, the payment of taxes would now be ensured through “universal self assessment and third-party audits”.
“We will seek the services of 1,500 professionals from the ICAP (Institute of Chartered Accountants of Pakistan) for the audits,” he said, adding that defaulters would be sent reminders to pay their taxes.
If they failed to pay their taxes even then, they would be arrested, the minister warned.
“It’s about time that people who are not paying taxes start paying taxes because otherwise, people like you and I suffer.”
He added that a new mechanism would also be introduced to ensure proper recovery from the retail sector under which prizes would be given to consumers for ensuring that they collected receipts from retailers.
The minister also announced that new programmes would be introduced to support remittances.
While he admitted that the current account deficit was growing, he assured the businessmen that the government reviewed the situation every week and things would improve in the future, especially because he saw great potential for the growth of exports in the information technology sector.
Inflation and agriculture
The minister also acknowledged that there had been a rise in inflation, particularly food inflation.
“Food inflation is rising due to international prices as we are a net importer of food now,” he said, adding that the failure to focus on the agriculture sector had also contributed to the problem.
The minister said administrative and market measures were being taken to address the problems and build infrastructure in the agriculture sector.
Assurance to business community
He assured the businessmen in Karachi that the government would address their issues.
Tarin said a glimpse of his commitment to address the business community’s issues was visible in the budget for the fiscal year 2021-22.
“[For] the budget, I tried to consult everybody in the business community, tried to accommodate as much as I could, while remaining within the framework of the IMF (International Monetary Fund),” he said.
“At times, I even flouted some of those areas [as] you know IMF is not happy on a couple of things, but I still tried to move forward.”