ISLAMABAD: Pakistan's finance chief Shaukat Tarin said on Friday the government was not planning to introduce new taxes after securing a recent agreement with the International Monetary Fund, though he added it was going to withdraw certain exemptions.
The IMF announced earlier this week it had reached a staff level agreement with the administration in Islamabad which required the approval of the international financial institution's executive board following the implementation of fiscal and institutional reforms by Pakistan.
It laid out five conditions which included sales tax reforms, increase in petroleum development levy and the greater autonomy for the central bank.
Addressing a news conference shortly after the IMF announcement, Tarin had said the government would meet the five demands by presenting supplementary finance bills which are more popularly known as mini-budgets in Pakistan.
"We are not going to increase taxes but withdraw some exemptions," said the finance chief.
He recalled his statement after assuming the office that the government would not burden the country's taxpayers anymore, adding this was despite the fact that Pakistani officials had already agreed to impose new taxes to get $500 million from the IMF in March.
Asked about the dismal performance of Pakistan's national currency, Tarin said people previously thought the rupee was sliding due to the delay in the IMF agreement or increase in the discount rate amid souring inflation.
However, he maintained that Pakistan's national currency was under pressure due to speculative trading in the market.
Tarin said some people were even spreading rumors that the Pakistani currency would get demonetized, though he categorically announced that "nothing like that is going to happen at least on my watch."
"Let me warn the speculators that the Pakistani currency will also move in the other direction," he continued. "We are taking some measures to ensure that. And when the rupee is going to move on the other side, it hurt them a lot. So, they should not indulge in such speculation."
The finance chief said it was important to keep an eye on the real effective exchange rate to determine the real strength of the rupee.
"Experts say the Pakistani rupee should be somewhere around Rs165 to Rs167 against [the US dollar] ... Our national currency is undervalued by about Rs10," he said.
The Pakistani rupee traded at Rs175.46 in the interbank market on Friday.
