ISLAMABAD, June 17: Pakistan has been promised $2 billion annually for the next three years jointly by the World Bank, the IMF and the Asian Development Bank, says a senior government official.
“Our thinking is to get loans on high concessions from the three donors and use them for retiring expensive debts,” said Mr Moeen Afzal, Secretary-General, Ministry of Finance.
Speaking at an economic forum arranged here on Monday by the Associated Press of Pakistan, he said for the current financial year Pakistan had been offered roughly $2.5 billion by the donors which included $1.6 billion International Development Assistance (IDA) funding on a marginal interest rate.
Mr Afzal said that the World Bank which used to offer $200 million annually on an average had now increased its funding to $1 billion for Pakistan.
Nevertheless, he said, all the three donors expected Pakistan to achieve 6 to 7 per cent GDP growth rate. “Donors believe that Pakistan has the potential to manage 6 to 7 per cent growth rate,” Moeen Afzal said, adding that Pakistan hopes to have a gradual increase in the growth rate.
He said had there been no persistent drought conditions and Sept 11 incident, Pakistan would have achieved a better growth rate.
The secretary-general stated fundamental structural changes had been made in the tax system to collect adequate revenues during 2002-2003. “I believe Rs460.6 billion revenue will be collected during the next financial year,” he added.
He said that the government would now be relying on income tax and sales tax to collect considerable revenues. “They will be the two major taxes of the future.”
Mr Afzal justified the increase in the prices of edible oil and said that the consumption of the commodity was so high that it needed to be slightly taxed. According to the World Health Organization it was not a healthy sign to see so much consumption of edible oil in the country, he added.
He termed the new budget “conservative in approach” that sought to increase growth and investment.
The secretary-general termed the Lahore-Islamabad motorway project economically unviable, as it was not giving enough money.
He also said that the construction of Islamabad-Peshawar motorway was the decision of the previous government and now could not be abandoned half-way through.
“The present government is not in favour of motorways but for necessary expressways,” the secretary-general finance said.
Responding to a question, Member CBR (Direct Taxes) Wakeel Ahmad Khan, who was also present on the occasion, said that the government would earn additional Rs1.3 billion due to the withdrawal of various exemptions in the new budget.
