Budget 2024-25, Kiya Awam main Mazeef Taxes Denay ki Sakat Hai? Economist Khaqan Najeeb Analysis
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Budget 2024-25, Kiya Awam main Mazeef Taxes Denay ki Sakat Hai? Economist Khaqan Najeeb Analysis
Budget 2024-25, Kiya Awam main Mazeef Taxes Denay ki Sakat Hai? Economist Khaqan Najeeb Analysis
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00:00 So, Anika, it's not easy for Pakistan, right?
00:29 If a country is approaching the lender of the last resort or the doctor of the ICU for the 24th time,
00:37 it means that the disease is very deep and there is no shut in it.
00:42 The last engagement that you have just done, you have got a breathing space from it.
00:47 The savings have gone to 9 billion dollars, a little inflation has decreased.
00:52 The country has been slowed down by 2% growth and the current account of the country has been managed.
01:00 We are standing exactly here.
01:02 But your detailed issues, your growth architecture,
01:07 that is, the productivity of the country is weak in every area,
01:11 the energy sector is bleeding, it is inefficient,
01:14 Pakistan's both taxation system and expenditure system is inefficient, does not collect as much,
01:22 and the way the expenses have increased, we are in an uncomfortable budget situation,
01:28 that is, 8% of the budget is being lost, 3.5% is written in our law.
01:33 Kashkhol can never break in Pakistan without fixing these three things.
01:39 But the good news is that a new government has come.
01:43 The mechanism of continuity has become new,
01:48 which coordinates, which connects internationally,
01:52 which also gives continuity, whether it was going on, it is still going on,
01:56 for privatization, at least it was not removed.
02:00 And it also tries to remove the bottlenecks.
02:05 Will we be able to make this agreement with the IMF on those terms
02:11 which will help in increasing the country's growth?
02:15 That will be dependent on what kind of negotiation is there.
02:18 So, Doctor, I am sorry I am cutting you short.
02:20 This negotiation work is often very weak from the side of Pakistan.
02:25 Because the people sitting in the IMF and those who have been negotiating in the last phase,
02:33 they say that Pakistan does not push the IMF on many issues.
02:38 And sometimes we are not in a position as well.
02:40 You have said something important, that we have slowed down growth to handle things.
02:45 But growth slows down. It is a very weird cycle.
02:49 If growth slows down, then inflation will also be low.
02:51 We have to increase growth, but inflation will also increase.
02:54 So, to balance this out, so that the trickle-down effect does not fall on a common citizen,
02:59 on his electricity bills, on his food, how will we balance this?
03:03 Until Kashkhol is broken, let's protect a common man.
03:07 So, one thing is that IMF and ICA is a matter of good negotiation and it is a matter of good preparation.
03:15 If they are telling you to put 18% of your GST, then explain to them that this is an indirect tax.
03:25 And the exemptions that we have given at the moment can be revoked.
03:29 But we will not put it on food, milk.
03:32 Then they will ask you the next question, if I am from the IMF side, because they are from our kind of university.
03:38 So, they will ask you that how will you fulfill the 12,500 billion that we have agreed with you next year?
03:47 So, tell them how will the tax be on the retailer?
03:50 How will the tax be on the wholesaler?
03:52 How will the agriculture income tax be?
03:54 You convince them how the capital gains tax will be imposed on real estate?
03:58 Why can't the inheritance tax be imposed or why can you impose it?
04:03 How will the tax gaps be fulfilled?
04:05 How will you revoke the exemptions of the 12,500 billion that are in the marat?
04:10 Will the IMF tell me that I don't want to do all this, I want to impose an indirect tax?
04:15 IMF is a matter of good preparation.
04:18 Secondly, if you don't want to increase the electricity bills, then tell them how you want to reduce the bills by taking efficiency measures.
04:25 How do you want to reduce the cost of production by renegotiating with IPPs?
04:30 So, I am giving you those options which I would negotiate with the IMF.
04:34 I have run the Pakistan's 2013-16 program.
04:38 That is the only program Pakistan has ever ever completed.
04:42 It was PMLN's government and we used to run it in Pakistan's terms.
04:48 We used to go with a lot of preparation, we used to go with a professional team.
04:52 We used to explain to the experts of every area what to talk about.
04:56 By going, I mean that we had to go to Dubai because Pakistan had a lot of security problems at that time.
05:04 So, they didn't come to Pakistan.
05:06 There were 12-12 reviews.
05:08 The thing is that you have to do this work once for three years.
05:12 But the real thing is that you have asked that if you want to bring growth and if Pakistan does not want to bring inflation, then what to do?
05:19 Pakistan has to increase its production capacity, it has to improve its agriculture yields in simple words.
05:25 It has to deregulate its cost of doing business.
05:29 Yesterday, the English newspaper, The News, its lead article is "Unshackling the Pakistan Economy".
05:36 I have written that and in that I have raised exactly the point of Anika,
05:41 in 1200 words, I have explained that the 120 regulatory agencies that have been fighting the Pakistan economy
05:49 and the red tape that is stopping it, the domestic investors are getting excited.
05:54 Here, we are incentivizing real estate and stopping manufacturing.
05:58 How can we increase our productivity?
06:01 If it increases, every person's efficiency will increase.
06:05 We have opened a sector of media, and the jobs are increasing.
06:11 Similarly, we have closed the electricity sector, we have closed the PIA, we have created state monopolies.
06:17 So, we will have to go towards privatization, I agree with that.
06:21 But, Dr. since you are saying that negotiation is the matter in the IMF programs,
06:28 at this time, you have the internal news, this I know for sure,
06:32 has there been a negotiation that we can take this as a smooth sailing?
06:38 One thing I am not comfortable with, what the IMF has written, for me that is something new.
06:44 I deal with IMF not only in Pakistan, I know what goes on in other countries.
06:48 They have written that this was an assessment mission, and if the management agrees to its report,
06:53 then the board will be given the instructions on how to move forward with Pakistan.
06:57 I don't think this happens in the normal way.
07:00 This is something new.
07:02 If Pakistan had asked for this thing for the program negotiation,
07:05 I will give you the exact example of 2013, that mission was for the review of Article 4.
07:12 I had also given the same advice to the Minister of Treasury that we should change this Article 4 review,
07:18 in the program negotiation, and we had signed that program on July 1st, or signed it on 2nd.
07:25 Over here, at that time, our debt to equity ratio, and today our debt to equity ratio,
07:30 is a difference of the sky and the earth.
07:32 At that time, our deficit, and today our deficit, is a difference of the sky and the earth.
07:36 At that time, our interest, and today our interest, is a difference of the sky and the earth.
07:41 At that time, the value of the dollar, and today's value of the dollar, is a difference of the sky and the earth.
07:45 So, won't our negotiation power be weak?
07:48 Our negotiation power is definitely not that comfortable,
07:53 because all our indicators are in difficulty.
07:56 But, on the other hand, if you say that our response will be much deeper,
08:02 and we are ready to broaden our tax base, and this is my reform program on that,
08:08 I am ready to take out pensions from state funding,
08:12 I am ready to go to targeted subsidies,
08:15 then IMF will be surprised.
08:17 Anika, here's the trick.
08:19 Whichever country it is, this is my best advice to them.
08:22 They know their country better than the folks who come and stay in a hotel and stay for 11 days.
08:28 This is my promise to Pakistan.
08:30 The Pakistani nation, the Pakistani doctors, the Pakistani professionals,
08:34 understand the numbers of this country better than the external teams that go from Pakistan.
08:40 They also understand that we understand this thing.
08:43 Put your best foot forward.
08:45 Negotiate it out, and Allah will do it, you will be able to.
08:49 But you've got to put a professional team to do this.
08:51 this. Right.