Prime Minister Shehbaz Sharif has described the Trace and Track System (TTS) as “fraud” and formed an inquiry committee.

“This Track and Trace System is nothing, but a fraud,” he said in an address to his cabinet that was telecast live on Friday. “The TTS was enforced in the PTI tenure. A committee has been formed for the system’s failure.”

In 2021, the Federal Board of Revenue launched the TTS to boost additional revenue, digitise the economy, and curb counterfeiting.

In the initial phase, the FBR rolled out the project for the tobacco sector to prevent leakage of revenue and under-reporting of production and sales of tobacco products. The TTS was planned to be implemented in the sugar, fertiliser and cement sectors in the next stage.

Premier Shehbaz was of the view that the FBR made a mistake by allowing the owners to install the system, adding that the initiative could have resulted in trillions of rupees of income.

“The system was ruined by criminal negligence and collusion. Those who harmed the economy will be held accountable,” he said and expressed his concerns over the implementation of the TTS.

“If billions of rupees do not come to the national treasury, then we have no right to govern,” PM Shehbaz said and vowed to bring money to the national exchequer.

The prime minister added that the government would have to take “tough decisions” in the interest of the country.

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Economic indicators

Pakistan’s economic indicators are showing positive signs, with an agenda of painful reforms and privatization on track, Prime Minister Shehbaz Sharif said on Friday, ahead of an IMF board meeting to decide on a $1.1 billion funding for the country.

The prime minister said that exports and remittances had shown a rise within one-and-a-half month of his government.

The IMF board is meeting on Monday to decide on the disbursement of the second and last tranche of a $3 billion standby arrangement Islamabad secured last summer to avert a sovereign default.

With a chronic balance of payment crisis, Pakistan needs $24 billion in payments for debt and interest servicing in the next fiscal year starting July 1 - three-time more than its central bank’s foreign currency reserves.

The South Asian nation is seeking yet another long-term, larger IMF loan. Pakistan’s Finance Minister, Muhammad Aurangzeb, has said Islamabad could secure a staff-level agreement on the new program by early July.

If successful, it would be the 24th IMF bailout for Pakistan.

The IMF-led structural reforms require Pakistan to raise its tax to GDP ratio from around 9% to at least 13%-14%, stop losses in state-owned enterprise and manage its energy sector losses which run into trillions of rupees.

“It is not just for an antibiotic to work anymore. It needs a surgery,” Sharif said.

Pakistan’s finance ministry expect the economy to grow by 2.6% in the current fiscal year ending June, while average inflation is projected to stand at 24%, down from 29.2% in fiscal year 2023/2024.

Inflation soared to a record high of 38% last May.

Moreover, the federal cabinet approved the validity of Proof of Registration (PoR) cards for Afghan refugees to June 30 with their repatriation set to begin in the third phase.

Prime Minister Shehbaz Sharif presided over the meeting which did not announce any date for repatriation of those refugees who hold the PoR cards.

“On the recommendation of the Ministry of States and Frontier Regions, the federal cabinet approved the extension of the validity of PoR cards of Afghan refugees from April 1, 2024, to June 30, 2024,” said an official statement, issued by the Prime Minister’s Office.

The PoR cardholders will be repatriated in the third phase of the plan that will begin after the repatriation of “illegal foreign nationals” residing in Pakistan is completed, the statement added.

The cabinet members were informed that PoR card holders avail schools, bank accounts and other facilities in Pakistan.

The statement said the first phase of repatriating foreign residents living in Pakistan without any identity documents was in progress.

(With input from Reuters)