- Finance minister says he will try to convince IMF during the 6th review that an increase in electricity tariff is not the solution to the problem
ISLAMABAD: Finance Minister Shaukat Tarin said that Pakistan would be seeking some space from the International Monetary Fund (IMF) to address the circular debt issue in the power sector during the upcoming review of the Extended Fund Facility (EFF).
Speaking at a press conference along with State Minister for Information Farrukh Habib on Friday, the finance minister termed the power sector as challenging and stated that he would try to convince IMF during the 6th review that an increase in electricity tariff is not the solution to the problem.
“We would sincerely negotiate with the IMF and there are only two issues- revenue and the power sector and as far as revenue is concerned there would be no issue to achieve, if current pace continued, Rs5.8 trillion revenue target committed to the Fund for the ongoing fiscal year,” he said.
However, Tarin said that there are challenges in the power sector and the government is making a proposal to convince the fund that an increase in tariff is not the solution to the problem as an increase in electricity tariff would impact the poor and the industry.
About petroleum prices, the finance minister said that petrol price is still cheaper in Pakistan compared to the rest of the world and the regional countries, and there are only 16 countries where petroleum prices are less than in Pakistan primarily, because these countries were oil producing.
The minister said the crude price was increased in the international market from $42 barrel in January February to $80 barrel, and Pakistan was also affected.
“If we want to further reduce petroleum prices, the government would have to pay the cost from revenue as petroleum levy, which was Rs30 per liter in 2018 has been reduced to Rs2 per litre,” the finance minister added.
The minister said that inflation in Pakistan was owing to global phenomena as prices of commodities in the international market were 10-12 years highest level.
Pakistan was also affected because it has been importing wheat, sugar, pulses, and cooking oil.
The present government to address the 30 years of neglect of the agriculture sector was investing in agriculture to increase production, so that it could use locally-produced goods and their prices are less as well.
The minister expressed the hope that inflation will decline once the Covid cycle breaks globally.
Meanwhile, he said that the government has taken a number of measures to bring down the prices of essential commodities and started releasing wheat to flour mills, reduced sale tax on ghee, and fixed sugar price at Rs90 per kg.
"These measures would reduce per kg ghee prices by Rs45-50 per kg, 20kg flour bag to Rs1,100 per bag," Tarin added.
Moreover, he said that the government wanted to revive the magistracy system in the country to monitor and control prices.
The finance minister said that the economy was growing and is evident from the Federal Board of Revenue (FBR) tax collection, which collected Rs185-190 billion more than the target set for the first quarter.
This simply reflects that the economy is growing, he added.
The impact of economic growth would increase people's income and to support the low-income group, Kamyab Pakistan Program would also be launched in a few days.
This would be a comprehensive programme to provide interest-free loans to the people, and skills training, and loans for construction of houses.
However, he said that disbursement of cash to the people through the Ehsaas Programme is not a permanent solution and "we have to teach the people how to catch the fish".
He added that 12 million poorest households would receive direct food subsidies from October.
Copyright Business Recorder, 2021