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How will the government meet the IMF's stringent conditions? Mehtab Haider's Analysis
How will the government meet the IMF's stringent conditions? Mehtab Haider's Analysis
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00:00Mr. Mittab, the government is trying to solve the issue of Chinese rollover and UAE rollover.
00:05What are the possibilities of this?
00:06And as an ambassador, you see that the delegation is going and trying to contact them.
00:13Are there no efforts or are we operating in the midst of a global politics?
00:21So, what are the possibilities that these rollovers can happen?
00:26In the name of Allah, the most Beneficent, the most Merciful.
00:28Look, basically, at this time, Pakistan's economic policy making is stuck between two big countries.
00:39On one side is Uncle Sam and on the other side are the Chinese.
00:42They have their own global politics and on one side we say that we will also do the IMF program
00:51and on the other side we are also talking about CPEC-2.
00:53So, confusing signals are also coming from our side and the basic thing is that I think this rollover should happen.
01:02Its contribution has not come yet, but I want to tell you a little bit about its process.
01:08Look, the process is that when this external financing and rollover is confirmed,
01:1312 billion total, our requirement is 26.2 billion dollars this year,
01:18if you keep the debt repayment and current account deficit in front of you.
01:22Out of that, there is a rollover of 12 billion, commercial financing of 4 billion,
01:27and we have to complete 10 billion dollars with multilateral and bilateral.
01:31Now, IMF is saying that we have another financing of 2 billion dollars.
01:36In that, we directly from Saudi Arabia, either we did deposit of Saudi oil facility,
01:44or there is an ITFC of Islamic Development Bank.
01:47Through that, we want that 1.2 billion dollars should come from there
01:51and 600 to 800 million dollars of commercial financing should come.
01:55Look, if there is no rollover at this time, then we do not have money to return them.
02:02So, rollover should be done.
02:04The issue of timing is of course.
02:06Because we want that in September, all this rollover should be completed before that
02:12and external financing of 2 billion dollars should also come.
02:15Why?
02:16The reason for that is that we have to sign on an LOI.
02:19It means letter of intent.
02:21We will sign on letter of intent, Minister of Finance and Government State Bank of Pakistan.
02:27After that, it will take at least 2 weeks to circulate it to the board members.
02:32So, if till 10th September, Pakistan does not sign on LOI,
02:39it means that in September, Pakistan's case will not go to the board.
02:45Maximum till 15th September.
02:47So, as a result of that, a Pandora box will open, which will be on the fiscal front.
02:54Mr. Shahbaz Rana is talking about it.
02:56But this will not be the only thing in it.
02:59There will also be that the government is doing another plan.
03:02That plan is that it wants to cut its PSDP and annual development plan.
03:07So, IMF will also raise this question that first you said that we want to keep the development budget more.
03:13You kept it 1400, then you made it 1100.
03:16Now you are talking about 750, Federal PSDP.
03:19And similarly, you want to cut the development budget of Provence.
03:24So, you said that we are keeping this development budget so that we can kick-start the economy and get a growth of 3.5%.
03:31If they cut the development budget, then macroeconomic numbers will go down.
03:37How will they satisfy the IMF?
03:40They talked about subsidy.
03:42I am talking about the macroeconomic numbers going down.
03:46And if this goes on till October, then it will go towards the mini-budget.
03:51And we will also start talking about the overall expenditures.
03:55You are talking about the mini-budget, right?
03:57Mr. Shahbaz, you said a terrible thing in your news because it caught my eye.
04:02That to collect this tax, the professionals and contractors here will have to pay more tax.
04:10The government is not budging as much as it used to before.
04:16We have seen that they are showing a little spine.
04:19But will they be able to impose tax on the contractors?
04:24Or will they have to backtrack a little and partial tax will be imposed?
04:28Look, I think this matter is up to partial taxation.
04:33According to their plan, they have promised the IMF to collect an additional 50 billion rupees from the contractors this year.
04:42And I would like to tell you with great pride that our contractors do not pay tax.
04:47Approximately 62 or 64 contractors have given 5 lakh rupees in the first two months.
04:52One should clap for them.
04:53It is not that they do not pay tax.
04:55So you can guess from this that if they give 5 lakhs in two months,
05:00then how much tax will they give you in the whole year?
05:03The additional 50 billion rupees will come from them.
05:05The government has budged a little.
05:07It is not that they have not budged.
05:09The day there was a strike of the contractors, they issued a document in the name of a simple tax announcement.
05:17The FBI also issued a notification for this.
05:20In this, for you, for the business community, for the rest of the people who want to work honestly and want to pay tax,
05:27there is a 28-page announcement for them,
05:30in which you have to tell how much is the value of the furniture in your house.
05:34If you have cash, how many coins are there in it and how many notes are there.
05:38They have asked for this much.
05:39How much is the balance in your bank?
05:41There is no such question for the traders.
05:43They did not ask for a bank account.
05:45It has been said that you tell the total value of your movable and immovable assets.
05:52The problem with the traders is that they do not want to tell their source of income.
05:57So we have facilitated it.
05:58Now let's talk about the rate of tax.
06:00There is a tax on them from 100 rupees per month to 60,000 rupees per month.
06:05Now the government can do something about it.
06:08They have indicated.
06:10And let me tell you that a meeting is also going to be held in the FDR tomorrow.
06:14So the government is going to avoid it.
06:16The basic reason for this is that the government is very weak politically.
06:21The government cannot afford all these things.
06:23Believe me, when there were attacks in the medieval era,
06:31and they went to occupy a city,
06:33Islamabad has become a fort of that kind of medieval era.
06:36There are tankers everywhere.
06:39And they have put containers everywhere.
06:41They do not understand that this is Islamabad,
06:43that we are sitting in such a city of the 16th century.
06:46You are also saying that the government is avoiding it.
06:48If the government is avoiding it, then where will they get the 102 billion gap from?
06:56Whose pockets will they take out the money from?
06:58Before answering your question,
07:01one thing that has come from the latest FDR announcement,
07:05in which they have said that there is a shortfall of 102 billion rupees,
07:09the interesting thing they have said,
07:12I would like to tell your viewers.
07:14They say that our revenue is big,
07:20but they clearly indicate the number of inflation.
07:22They say that last year during this period,
07:25inflation was 28 percent.
07:27Now inflation has increased by 11 percent.
07:30This is why they have tried to blame us.
07:33Due to the shortfall in inflation, our tax is decreasing.
07:37Secondly, they say that we have given more refunds.
07:39This is why our target has decreased.
07:42But let me tell you one thing.
07:44We are in the IMF program.
07:46This government will avoid it politically.
07:48Political gimmicks.
07:49They keep them in their place.
07:51But if you try to tinker with this scheme to an extent,
07:56then the IMF program will be in more danger.
07:59They can talk about one thing.
08:03In a few days, the government or the FDR will announce a mechanism.
08:09The mechanism will be that there are 84 markets in Pakistan.
08:14FDR has announced fair market valuation of 26,000 markets.
08:2084 markets have a maximum rate of 60,000 rupees.
08:26They say that if someone's turnover is less or more than 60,000 rupees,
08:33then there is a mechanism to reduce the tax.
08:38If the turnover is less, then the rate can be reduced.
08:43If they try to make changes that are endorsed by the IMF,
08:49then the IMF program can be in more danger.
08:51This is not a positive thing.