The Imran Khan's PTI government has repaid $1 billion of foreign debt incurred in 2016 by issuing an international Sukuk at 5.5%. The ministry is planning to pay an additional $1 billion foreign debt by floating a second international SukukMinistry of Finance
Meanwhile, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) wrote a letter to Finance Minister, Shaukat Tarin, asking him to inquire into the hike in interest rate 2 years ago.
State Bank of Pakistan raised its policy rate to 13.25% in 2019 amid high inflation and a widening fiscal deficit. The hike took place at the start of the International Monetary Fund’s (IMF) $6 million loan program.
The FPCCI said that the hike in interest rate was unfair and caused the business community to lose money.
“The decision to fix the interest rate at 13.25% diverted an additional Pkr. 1.1 trillion of taxpayers’ money into banks annually, which is almost equal to our defence budget, increasing our debt servicing to Pkr. 2.71 trillion in 2019-20,” the association said.
“A high-level inquiry should be conducted into the deliberate acts of debt mismanagement, which has cost the country’s taxpayers Pkr. 2.5 trillion, and it is still draining fiscal resources,” it added.
The FPCCI further added that as the FBR had exceeded its quarterly tax collection target by Pkr. 187 billion, the business community had expected a tax relief for the industry and the general public.
Pakistan and the IMF are currently conducting a review of the loan program. The IMF has asked the government to raise the revenue collection target for the current fiscal year by about Pkr. 500 billion, which would further burden the industry and the people.
“It is disturbing for us to learn through press reports that the International Monetary Fund (IMF) has demanded imposition of taxes of Pkr. 500 billion during the current financial year,” the FPCCI said.
The letter was co-signed by Younas Dagha, Chairman of Policy Advisory Board of the FPCCI, and Nasser Hayat Maggo, President of the FPCCI.