Govt tried to give 'maximum relief' to the public in Budget 2021, says finance adviser

Published June 13, 2020
Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh addresses the media in Islamabad. — DawnNewsTV
Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh addresses the media in Islamabad. — DawnNewsTV

Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh on Saturday said that the PTI government will cut its own expenditure due to the difficulties faced by the nation amid the coronavirus pandemic.

Addressing a post-budget press conference in Islamabad along with Information Minister Shibli Faraz and Industries Ministries Hammad Azhar, Shaikh said the country's economy was on the right track before it was negatively impacted by the outbreak of the novel coronavirus.

Giving details of the government's efforts to mitigate the economic impact of the pandemic, he said it had introduced the Ehsaas Emergency Cash Programme and distributed money to people "without any discrimination in a most transparent manner", and added that the government will increase the scope of the programme in the next fiscal year.

He said in the Budget 2021 the government made efforts not to increase taxes and to keep the rates of products at their original prices. "We tried to give maximum relief to the public," he added.

"The most important thing that we cannot get rid of is returning loans. We have to give Rs2,900 billion this year. Reducing that is not within our power, please understand that it is not our fault."

He claimed that the Ehsaas programme could have been expanded "20 times" with the amount of money the government has to return.

"We inherited a broken economy. PTI's government had to repay billions of dollars in loans. But we still managed to collect Rs1,600bn in non-tax revenues," Shaikh said, adding that the entire world was "praising" the government's economic performance.

"The International Monetary Fund (IMF) board praised us. Moody's increased our rating. Bloomberg called our stock market the best in the world in December 2019. We witnessed a 137 per cent increase in foreign direct investment (FDI)," he told the presser.

"All of these things were happening but then came the coronavirus [outbreak] and that hurt our economy," he added.

He clarified that the government's "primary responsibility" is to return the loans and "fulfil its international obligations". He added that the government will decrease its current expenditure while increasing the development expenditure.

Detailing the steps taken by the government to provide relief to businesses, Shaikh said that duties on 1,623 tariff lines of raw materials are being eliminated while duties on tariff lines in packaging and rubber industries, among others, are being reduced. "This will reduce the cost of doing business so exports will increase and thus more people will be employed."

He said the government had abolished 10 different types of withholding tax while the duty imposed on the import of testing kits for the coronavirus, personal protective equipment and cancer equipment will be removed.

The adviser said that "historic incentives" were given to the construction sector, while the Capital Gains Tax is being halved and the federal excise duty on cement was also reduced.

The minimum tax in the hospitality sector was also brought down to 1.5pc, he said.

According to Shaikh, all big shops that will connect to the Federal Board of Revenue (FBR) directly will have their sales tax reduced from 15pc to 12pc.

The adviser said that laws are also being changed to facilitate businesses. "Monitoring will be done throughout the year and if there is any shortage, policies will be made accordingly.

"International organisations, including the IMF, World Bank and Asian Development Bank are appreciative of this government's financial discipline," he added.

Responding to a question, Shaikh said the government is committed to increasing the per capita income and national savings. He added that the privatisation process had been accelerated and will be further expanded to bring efficiency in the public sector.

Shaikh said the government was unable to achieve its revenue target due to the pandemic.

He also said the condition of showing identity card for purchases over Rs50,000 was revised to Rs100,000.

"We are committed to the documentation of the economy but at the same time, we want to provide maximum relief to the people," Radio Pakistan quoted him as saying.

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