By Asif Shahzad
ISLAMABAD (Reuters) – Pakistan’s Prime Minister Shehbaz Sharif said on Tuesday that the annual budget this week will levy more taxes on real estate, which he termed as a non-productive sector.
The South Asian nation of 220 million people is facing a balance of payment crisis with foreign reserves falling below $10 billion, hardly enough for 45 days of imports, a widening current account and historical fiscal deficit.
A fiscal consolidated budget to meet targets given by International Monetary Fund (IMF) will be presented on Friday.
“It is inevitable to tax non-productive assets,” Sharif told a pre-budget seminar in Islamabad. “The lands lying vacant just for speculative purposes is disservice to this nation,” he said.
Sharif’s predecessor Imran Khan had given the real estate sector a blanket amnesty to whiten black money, or what his government would say was to give a boost to the construction business after COVID-19 shutdowns hit industry hard.
Khan’s opponents say his undue projection of the real estate sector killed small and medium industry and discouraged the business community to invest in trade and markets, a charge he denies.
Sharif, who took office in April, told the seminar that he inherited a broken economy with shrinking reserves, unmanageable external debts and huge fiscal deficit, saying that the current FY2021-22 will post historical fiscal deficit of 5,500 billion rupee ($27.19 billion).
“The country doesn’t have money for oil and gas,” he said.
The economic meltdown has left Pakistanis to go through worst power cuts and unbearable rising food prices with a double-digit inflation.
The government has announced it will revert back to a five-day working week from six days Sharif decided shortly after he came to power in April in a bid to try boost productivity.
Pakistan’s GDP growth will slow to 5% for the upcoming fiscal year beginning on July 1, following a belt-tightening budget aimed at winning the IMF support.
“These are tough times, but we will overcome it,” Sharif said.
($1 = 202.2500 Pakistani rupees)
(Reporting by Asif Shahzad; Editing by Marguerita Choy)
