Budget delivers on commitment to shift from economic stability to economic growth, says Aurangzeb
Finance minister holds post-budget press conference. Screengrab
Finance Minister Muhammad Aurangzeb, flanked by Information Minister Attaullah Tarar, Minister of State for Finance Bilal Azhar Kayani, Finance Secretary Imdadullah Bosal, FBR Chairman Rashid Mahmood Langrial, and Head of the Tax Policy Office Najeeb Memon, addressed a post-budget press conference on Saturday.
The finance minister said that last year, when discussions were held about economic stability, the government had committed to moving from stability towards growth.
He said this budget delivers on that commitment, with measures taken to shift from economic stability to economic growth.
Aurangzeb said steps have been taken in the budget to promote exports, including the abolition of advance tax and the proposed abolition of super tax for all exporters.
A subsidy of Rs70 to Rs71 billion has been provided to ensure a conducive environment for exporters, who will also have access to financing at 4.5 per cent.
He added that duties on the import of raw materials have been reduced to bring down production costs.
“We have made significant progress and you have read and listened to the budget speech,” Aurangzeb said, adding that the main themes of the budget are export-led growth and enabling factors.
“We have tried our best to bring all these areas into the enabling environment,” he said.
In terms of taxation, the advance tax has been abolished, the finance minister noted, adding that, in terms of super-tax, “we have decreased from 10 to 8%, which is again a very meaningful direction of travel”.
He noted that when he spoke with Prime Minister Shehbaz Sharif and the Cabinet yesterday, they specifically instructed that the super-tax be abolished for all exporters.
Saying that “this is not just a matter of taxation, it is also a matter of financing,” the finance minister said, “We are taking this refinance scheme to a different level”.
“For this, we have given a subsidy of Rs71 billion during this budget so that this financing remains available to the exporters of Pakistan at 4.5%,” he said. He continued, “In terms of policy rate and inflation, it is at 4.5%”.
Expressing gratitude to the governor of the State Bank and to those who spoke to the banks, Aurangzeb stated that it is a very big feature that this financing will be available at 4.5%, which he stated is in trillions.
Discussing bringing the cost down in terms of intermediate goods and raw materials, the finance minister stated that the mentioned financing mechanisms are “how we can increase export competitiveness”.
He added that “our focus remains on the goods, which is very important, how to bring down the goods trade deficit”.
He also noted that services are becoming increasingly important, in particular IT services, adding that overall goods and services export will hit $4.5 billion next year.
For this reason, he said that about the IT industry and freelancers, the 0.25% FDR should be maintained.
“We made an effort to release the lowest segments of the salaried class,” Aurangzeb said, from 5% to 1% and from 15% to 13%. “But the reality is that the slabs above that and especially the surcharge element is all in front of you,” he added.
“If we had to take this budget towards pro-business, pro-growth, so construction, obviously, housing construction plays a very important role and the transaction taxes that we have brought down, you have already seen about that,” he stated.
Discussing agriculture, he said, “This has increased by 15% year on year and this has crossed 2 trillion, which is the overall agricultural financing.”
On Friday, the finance minister unveiled a Rs18.8 trillion federal budget, proposing to significantly reverse punishing taxes imposed on the salaried class and the real estate sector while deepening economic liberalisation.
Read: Rs18.8tr outlay targets growth push
The Rs18.8 trillion expansionary budget was 20% or Rs3.1 trillion higher than the outgoing fiscal year’s revised outlay, indicating the government’s intentions to shift the gear from consolidation to spending.
Despite significant contributions by four provinces, the federal government has announced a Rs7 trillion deficit, which is higher than this fiscal year and will be filled by taking more loans. The government also plans to get $23.4 billion in foreign loans, including $2 billion through Euro and Panda bonds.