ISLAMABAD: Pakistan requires a three to five-year extension in the maturity of $12 billion debt from the Kingdom of Saudi Arabia, China, and the UAE as part of confirmation before securing approval from the IMF’s Executive Board on a fresh bailout package, said Minister for Finance Mohammad Aurangzeb on Sunday.

Soon after returning from China, the minister ruled out the possibility of seeking incremental foreign loans from bilateral partners and said that the external financing gap was quite “manageable”. Islamabad is only seeking re-profiling of its foreign deposits of $12 billion, including $5 billion from KSA, $4 billion from China and $3 billion from the UAE, for a three to five-year period. The IMF wants external financing assurances for 37-month period under the $7 billion Extended Fund Facility (EFF).

The minister also revealed that Islamabad has kickstarted process of re-profiling of Chinese Independent Power Producers (IPPs) debt for seeking extension in maturity and now a Chinese consultant would be hired to move towards achieving the desired objectives. The Chinese IPPs’ outstanding repayment stood at $15.4 billion till 2036 and Pakistan was making requests for securing an extension in debt tenor of five to eight years period.

“There is a need to understand the very delicate issue carefully as Pakistan does not seek any debt restructuring or haircut but it has requested for an extension in tenor of maturity of outstanding debt on account of both foreign deposits and Chinese IPPs debt,” Minister for Finance Mohammad Aurangzeb said while addressing a news conference here at the state-owned TV headquarters on Sunday.

He said that China had appreciated Pakistan’s efforts for taking tough decisions for clinching the IMF programme and China assured Islamabad to extend its support for getting approval from the IMF Executive Board. He said that Pakistan would have to pursue both China and the USA simultaneously and separately as both blocs possessed importance for Islamabad.

The minister said that there would be nine Chinese IPPs, including one transmission line, and they could not go ahead with knee-jerk approach. He said that the joint working groups would be established to create a win-win situation for both the sides. It would be long process for discussing with individual IPPs the issue of their rate on equity and dividend in detail, he added.

On avoiding duplication in sending tax notices, he said that there was no element of effective enforcement so what was achieved through sent-out notices. Now a central system would be devised whereby field formations would only come into the loop at the time of collection of taxes. He said that there were fake/flying invoices of Sales Tax refunds to the tune of Rs600 billion and Rs200 billion on mismatch of customs duty invoices.

To another query on introducing 19 pages form of income tax for salaried class, he said that the simplification of tax system was the way forward and they were focusing on introducing a simplified tax form of Tajir Dost Scheme at the moment.

On rightsizing of ministries, he said that the annual expenditure of ministries stood at Rs890 billion and 20 to 25 percent reduction should be achieved in terms of reducing their financial burden. 

The minister also confirmed that Pakistan was discussing $600 million commercial loan from Chinese banks. He said that Pakistan would launch the Panda Bond whereby they intend to register $1 billion out of which $150 to $200 million would be capitalised in the first phase.

The minister conceded that the combination of hiked interest rates, electricity prices and increased taxes multiplied economic woes but he reminded that the expansionary budget and derailment of the last IMF programme during the tenure of Imran Khan-led regime and then entangling with the IMF resulted in evaporation of foreign exchange reserves and created a trust deficit. He stressed that there was no other option but to go for seeking assistance from the lender of the last resort called the IMF.

He said that some unscrupulous elements were out for exploiting the situation but the Price Monitoring Committees (PMCs) at the federal, provincial and districts levels are monitoring the prices.

On the issue of local IPPs for reducing tariff, he said the Minister for Power would be making plans but they wanted to do it in such way whereby agreements would be honored and tariff should also be reduced, so a win-win situation needs to be struck. He said he had shown empathy with the salaried class but the tax rates were hiked for them because there were certain under tax and untaxed sectors. Now the government introduced a simplified Tajir Dost Scheme for slapping fixed tax ranging from Rs100 to Rs60,000 a month. He said the FBR identified 4.9 million potential tax evaders who possessed assets, owned vehicles and travelled abroad but never bothered to come into the tax net.