September 7, 2018 (MLN): The government vowed to introduce major changes to the federal budget 2018-19 and discuss important economic decisions during its first Economic Advisory Meeting held on Thursday, September 6th 2018.
The first meeting of the recently reconstituted EAC, chaired by Prime Minister Imran Khan, was attended by fifteen EAC members as well as other official members including Minister for Finance, Revenue and Economic Affairs Asad Umar, Minister for Planning Development and Reforms Division Khusro Bakhtiar, Secretary of Finance Division Arif Ahmed Khan, SBP Governor Tariq Bajwa, Adviser on Institutional Reforms Dr Ishrat Husain and Adviser on Commerce Abdul Razaq Dawood.
The rest of the three EAC members, Dr Atif R. Mian, Dr Asim ljaz Khawaja and Dr lmran Rasul, did not attend because of technical reasons. “They could not make it because our web-link was down,” an official said.
While there were discussions about major changes to the budget 2018-19 based on ground realities and realistic revenue and expenditure projections, the question of approaching the International Monetary Fund for a bailout was not brought up.
The meeting decided on the idea of three working groups on debt, fiscal challenges and current account deficit. The groups will have separate meetings with Finance Minister Asad Umar over the next week based on which another follow-up meeting would be held with the prime minister.
The members of the meeting demanded that government should make best use of its political and social capital to take tough decisions, wherever required, without taking into account the political repercussions within the first two months as they believed further delays in decision-making may only worsen the situation.
It was suggested that the government should review a major tax relief relating to income tax exemptions and discounts offered by the PML-N government as it could provide a more than Rs90bn cushion. They pressed on this idea to prevent the government from increasing electricity and gas rates for all as energy costs burden the lower and middle income groups the most.
Moreover, the committee also proposed that in lieu of expanding subsidies to biggies, especially the textile sector, the government should focus on subsidizing the value-addition sectors, as that is where the big return could be secured.
Majority of the participants supported expanding the tax net and strengthening budgeting besides taking long-term steps towards the long-term development challenges like job creation, developing the education sector, enhancing productivity and improving the performance of the government sector.
The participants also suggested institutionalizing the role of EAC for better coordination and continuous policy advice. It was in this background that the prime minister desired a follow-up meeting next week of the EAC on the basis of initial consultations of the working groups on financial, debt and current account related matters.
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