ISLAMABAD: The NA Standing Committee on Finance and Revenue on Friday asked the government to limit number of projects in the Public Sector Development Programme (PSDP) to 200-300 for effective development output instead of existing 1,200 projects.

The meeting presided over by Mr Faiz Ullah also asked the Ministry of Finance to share next-year budget strategy paper (BSP) with the committee for its input before presenting it to the cabinet for approval.

The members of the committee were of the view that suggestions from the standing committee could improve the BSP and the government would be in a position to present a better budget.

The committee recommended that a large PSDP portfolio of about 1,200 projects was leading to thin allocation of resources, resulting in project delays and cost escalations. Therefore, the government should include only 200-300 projects and try to complete them within the given timeframe and then move on to the next lot of priority projects.

The committee also advised the Federal Board of Revenue (FBR) to revisit its policy of tax collection because the current practice of high taxation was stifling economic activity and unless economy expands, the tax collection would not increase.

Committee Chairman Faizullah said the country was facing economic inactivity owing to the existing tax policy of the government and exporters were not getting their sales tax refunds under Faster system due to H-form. Some exporters claimed that Rs101 billion of small exporters were stuck up with the FBR and they were facing severe liquidity problem.

Members of the committee were of the view that such a situation was having negative impact of around Rs700-800bn on the country’s exports. The committee decided that a sub-committee would invite all the stakeholders to resolve the issue of sales tax refunds being faced by the small exporters particularly.

The committee also decided that as its recommendations were binding on the government, it would hold a meeting with National Assembly speaker and recommend the house for amendment in rules that give the NA committee on finance the right to review Finance Bill as well as the BSP and the PSDP before their presentation in the parliament for approval.

Faiz Ullah informed the committee that PM has decided to freeze gas and electricity tariff at $6.5 per mmBtu and 7.5 cents per kWh respectively for export-oriented sector till June and subsequent decision would be taken in the budget.

Ayesha Ghaus Pasha said that there was no progress in the FBR reforms. Moreover, she said that in the list of PSDP projects, not a single one was for capacity building and improvement in the softwares used by the tax department.

A senior official of the finance ministry told the committee that a total of 60 projects were part of the ministry’s demand for the PSDP with an estimated cost of about Rs154bn. This included local financing of about Rs137bn and about Rs17bn foreign exchange component.

The committee directed that the State Bank of Pakistan (SBP) to provide their views about the future up-gradation of Pakistan Mint as per their requirements.

The committee also expressed concerns over the proposed schemes by the FBR and noted that these were not supported by its vision of broadening revenue base in the country.

An additional secretary of the finance ministry clarified that separate programme for tax reforms had already been initiated by the FBR to increase revenue. The committee directed the FBR to prioritise their schemes before making the request to include them in the budget for financial year 2020-21.

Published in Dawn, February 29th, 2020