The Chairman of the FPCCI Advisory Board and National Business Group Pakistan, President of Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, as well as former provincial minister Mian Zahid Hussain, said on Monday that Pakistan will receive a seven-billion dollar loan from the IMF in over 37 months. The loan has an interest rate of less than five per cent, and paying the first instalment of one billion dollars was pleasant.
Mian Zahid Hussain said that now Pakistan can get cheap loans from the global financial market, which will significantly reduce its debt servicing burden, which has reached 10,000 billion rupees annually.
Speaking to the business community, the veteran business leader stated that the government is taking the necessary steps to meet the IMF’s goals, including abolishing or merging some federal ministries. The Federal Minister of Finance has recently announced a reduction in government expenditure.
He added that the IMF’s conditions also include eliminating losses in the electricity and gas sectors, increasing the tax base, and privatising public companies that are losing money.
The business leader stated that implementing these conditions is not easy, but it will improve the situation, whereas failure to do so may worsen it. According to him, Pakistan’s problems are declining tax collection and rising government expenditures, which necessitate serious efforts.
Mian Zahid Hussain said that the government should now strictly deal with tax defaulters because the burden of direct taxes on the public has steadily increased, and there is no longer room for further tax hikes.
He said that new measures are also necessary for recoveries. Government expenditure, which includes debt and interest payments, defence expenditure, development expenditure, subsidies, salaries, pensions, and so on, is much higher than its total revenue, resulting in a budget deficit.
Mian Zahid Hussain said that taking loans to cover this deficit is no longer feasible and that one of the main reasons for the flight of capital, industries, and experts from the country is our cruel tax system, which the taxpayers are unwilling to accept.
Loss of revenue discourages taxpayers and makes people reluctant to pay taxes, which increases the size of the underground economy and decreases the size of the formal economy.
Mian Zahid Hussain said that the government is trying to reduce the tariff of IPPs, which benefits everyone. He further noted that many IPP owners are not willing to cooperate with the government despite earning huge profits compared to their investment and looting trillions of rupees through all kinds of illegal and unethical tactics. For this reason, the government will have to apply pressure; otherwise, the electricity tariff could not be reduced.
