ISLAMABAD: A high-powered think tank formed by Prime Minister Imran Khan to draw up a short-term plan to start stagnant economic activity has decided to consider reducing the GST level from 17 to 15 percent and discussing the details with the FBR.
The think tank also decided to meet every week before the upcoming budget announcement which was expected to be announced in the first week of next month, maybe on June 5 (Friday) 2020.
“There is now a need to provide impetus to stimulate economic activity through incentive packages that reduce the cost of doing business and provide consolation for the poor segment, but also take fiscal steps that burden the rich more through direct taxation measures,” one member thought the high-powered tank said when talking to The News after the meeting here on Sunday evening. He said that the reduction in GST must be harmonized at both the domestic and import stages. The GST level on goods and services fell into the Central and respective provincial domains, also asked to develop consensus at a single level.
Other members said that it was not easy to continue the wish list when the country was under the IMF program.
According to a press statement issued here by the Ministry of Finance on Sunday, PM’s Advisor on Finance and Revenue, Dr. Abdul Hafeez Shaikh chaired the third meeting of the think tank here on Sunday to assess the situation arising from the economy related to Covid-19. the slowdown and its impact on individuals and businesses. The forum has a mandate to provide cognitive support to the ongoing federal government response in addition to providing assistance in designing new initiatives and correcting mid-way interventions that have already been implemented. The forum has representatives from leading public financial practitioners, financial analysts, bankers, economists and development and monetary academics. Participants included Counsel for the PM on Trade, Secretary of Finance, Dr. Ishrat Husain, Shaukat Tareen, Dr. Ijaz of the Prophet, Sultan Ali Allana, Arif Habib and Dr. Waqar Masood.
Counsel for PM on Finance engages with all participants in broad deliberations, while defining that the focus of the forum will remain on the short-term steps needed to provide an impetus to the economy that is under acute pressure due to both demand and supply compression. He stressed the need to learn from international experience in designing fiscal, monetary and other policy responses by the federal and provincial governments.
The think tank has compiled an “Impact and Urgency Response Matrix” by identifying several themes that can be followed up with low, medium and high economic impacts, adjusted to the short, medium and long time horizons. Participants discussed developing economic scenarios and identified priority areas that bring the potential to provide maximum economic impetus through accelerating aggregate demand and reducing supply concerns while also ensuring financial system stability, which is equally important in a strong economic recovery.
PM’s advisor Dr Abdul Hafeez Shaikh stressed the need to develop a roadmap for the chosen domain, so as to bring clarity about what needs to be done and who will do it. The need for data and real-time research is highlighted in the development of a clear roadmap and implementation framework. The forum chose six broad priority domains including improving social safety nets (Ehsaas and allied initiatives), food security and supply chain security, increasing the role of banks and financial institutions in designing appropriate incentives for market participants, starting housing with low and medium cost projects, making the provincial PSDP and ADP responsive to labor-intensive propositions and business facilitation through fiscal interventions.
The forum decided that the fiscal proposal included changes in Sales Tax rates, refunds, etc. Will be discussed with the FBR in detail, so that the next federal budget addresses burning issues that are very important to spur consumer spending. In addition, proposals related to financial and banking issues, including reviewing salary remuneration schemes, incentives for banks to finance MFIs and MFBs, steps to increase remittances and inject additional liquidity to commercial banks by cutting CRR / SLR and CCB, it was decided to be handled by the forum in more detail.
Counsel for the PM on Finance concluded the session with a consensus decision that a detailed roadmap for the six selected domains will be prepared so that each ministry is involved, to create further value in the ongoing plan intended to provide economic impetus. It was further decided that the review of the implementation of the PM Economic Stimulus Package (valued at Rs, 1.240 billion) would be a regular feature at the next think tank meeting to ensure value for money apart from smooth service delivery to appropriate segments of society.