Finance minister holds post-budget press conference

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.”

The finance minister also discussed the Zarkhez-e Scheme, which he said was introduced in this fiscal year and is all digital. 

“More importantly, it’s collateral-free; for small farmers, it’s not being said to keep someone as an individual or to mortgage someone’s house,” he said, adding that the scheme was introduced for small farmers and is moving in the right direction. 

Further, he discussed the prime minister’s agriculture loan, particularly for the youth, of which the total amount is Rs262 billion. Of the amount, Rs125 billion was allocated for agriculture, the finance minister stated.

Read: Achakzai questions state policies, Shehbaz vows response in National Assembly

He also discussed Pakistan’s need for value-added machinery, which he said is not being made in the country. “We can get it from China or other countries, which will help us actually increase the yield,” he said. 

“On all these things, custom duties, additional custom duties, regulatory duties have been zeroed,” the finance minister noted.

Terming agriculture as “one of the key tenets of growth,” Aurangzeb moved to discuss what he deemed matters of deepening and broadening.

For deepening, he said, he referenced “digital monitoring and other things which are going on at the moment,” saying he especially mentioned that additional revenue is being received from this.

Discussing the new tax-operation model, Aurangzeb noted that the government wishes to take it towards automation. “We want to take it towards AI,” he said, adding, “We are reducing human intervention”.

Moving to discuss widening, the finance minister stated that the retailer scheme was mentioned in the budget.

“We made a great effort in this budget, especially what was being said that you only talk about economic stability, economic growth, where is that?” Aurganzeb said, adding, “So this time, the fiscal space that was available, we have used it extensively”.

Although he noted that “there is more to do,” he stated, “I will say this again, the feedback that we have received is that we are moving towards economic growth”.

He added that the budget is going to play a very pivotal role in this regard.

Minister of State for Finance Bilal Azhar Kayani noted that “fundamentally, this is the budget of the salary class, this is the budget of the industrialists, this is the budget of the exporters, this is the budget of the construction sector”.

Kayani added, “this is the budget of the person who wants to build his own house and who does not have the means to do so”. 

“These are the other parts of our economy which needed resources so that our economy can move forward,” the minister said, noting that the budget aims to reduce the burden on citizens. 

He stated that the prime minister, finance minister, and the entire economic team “have always admitted that very few people are carrying the burden of this tax on their shoulders”.

“The salary class is at the top of the list,” Kayani said, adding that “that is why it has always been said that the government will give relief to the salary class when it gets a chance”.

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 more: 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.