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Stabilisation in exchange rate must to overcome inflation, says Shaukat Tarin

Advisor to the Prime Minister on Finance and Revenue Shaukat Tarin has stressed the need for stabilising the exchange rate to overcome inflation.

“Instability in the exchange rate has increased inflation and the government is trying to lessen its burden on people of low-income group,” Radio Pakistan quotes Tarin as saying during an interview in a private TV channel on Tuesday.

He said the government needed to maintain the rate near to the “real effective exchange rate”. He said the declining exchange rate had a huge impact on inflation.

Track and trace system to broaden tax net

The finance adviser said the track and trace system (TTS) of the Federal Board of Revenue (FBR) will be implemented in various sectors to broaden the tax net, adding technology was being employed for the purpose.

Prime Minister Imran Khan had on Tuesday inaugurated the TTS aimed at helping the government to minimise tax evasion and crack down on illicit trade in different sectors.

In the first phase, TTS has been implemented in the sugar industry to monitor the movement of sugar from factories in order to check tax evasion. The sugar industry has emerged as the second sector after cigarettes to be brought under the electronic monitoring system. The FBR is planning to bring the beverage, cement, fertiliser, iron and petroleum sectors under this system.

In reply to a question about an increase in power tariff, Tarin acknowledged that the International Monetary Fund (IMF) had demanded of the government to change the tariff rate.

However, he said that any hike in power tariff by the government would be less than what the IMF had demanded.

Replying to another question about tax collection targets, he said the assessment would be made on real assets of the people so that actual tax could be imposed on them.

The adviser said net international reserves of the SBP showed that equalisation was taking place on a net basis. “It also shows that your foreign currency reserves are not undergoing a rundown,” he added.

He stressed that the government was looking to provide respite to the urban middle class, which had been affected badly by the inflation.

Pressure on current account deficit

The finance adviser explained that the core inflation rate in the country still stood at 7.15 per cent. He said the pressure on the current account deficit was letting people to “psychologically convert goods into dollars, hence increase in the discount rate can stop that process”.

Responding to a question about grants from Saudi Arabia, he said there were some legal clauses in the KSA agreement draft, which the Law Ministry had vetted and the matter had been virtually settled.

Ahmed Mukhtar Naqshbandi

Media person and communication expert for over 25 years. Worked with Dow Jones News, World Bank, CNBC Pakistan, Aaj TV, ARY TV, Abbtakk TV, Business Recorder, Pakistan Observer, Online News Network, TTI Magazine and other local and world Publications.

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