ISLAMABAD: The government has decided not to increase the petroleum prices at this point in time but did not rule out adjustment in days ahead owing to sharp increase in crude oil prices in the international market, and for revival of International Monetary Fund (IMF) programme.
This was stated by finance minister Miftah Ismail addressing a press conference on Sunday.
He said that as Prime Minister Shehbaz Sharif believes the people cannot be further burdened at this point in time, today he would not increase the price, so there is no need to form long queues at petrol stations.
He however, made it clear that adjustment in petroleum prices would be inevitable in days ahead because government was providing Rs120 billion monthly subsidy and there is no sign of reduction in the crude oil prices in the international market. As the discussion with the IMF would start from May 18, 2022, he would try to seek leniency or a middle way on petroleum price from the Fund, he added.
Finance Minister strongly criticized the previous government over slashing by Rs 10 per litre petrol and diesel in last days of its tenure and stated that they had caused great harm to the economy and now the situation has further worsened with the increase in crude oil price in the global market from US$90 per barrel at that time to US$110 barrel now.
He also maintained that the previous government had not funded the subsidy on petroleum products. Shaukat Tarin committed to the IMF that not a penny subsidy would be provided and promised to the Fund that Rs 30 petroleum levy would be collected and Rs 17 percent GST would be imposed, he said.
Miftah Ismail said that in December 2021, Shaukat Tarin had also promised to the IMF to limit the primary deficit at Rs 25 billion for the ongoing fiscal year but actually it has increased to Rs 1320 billion, which in no way the present government be able to comply in two-month time.
Miftah Ismail has also claimed that the EFF programme was ended by the IMF, but he, soon after assuming the office, went to the IMF to restart discussion and when Fund sought political commitment, he proposed extension of one year in the programme as well as US$ 2 billion increase in loan amount. He said that talks with staff level IMF mission would begin from May 18 2022 and Secretary Finance would be heading the Pakistani delegation in talks initially and he would also join them. He said that the country would remain in the IMF programme.
Finance Minister said that Pakistan has become wheat and sugar importing country during the last three and half years because of smuggling of wheat, flour and urea, as well as, use of fake pesticide. He said that during the Pakistan Muslim League-Nawaz (PML-N) tenure the country was exporting wheat and sugar. He said this year the country would be importing three million tonnes of wheat and as chairmen of the ECC of the Cabinet he has already given approval last week in this regard.
The minister said that cotton production was 5.3 million bales last year, lowest after 1983-84; whereas this year the production is projected at 07 million bales compared to 10.17 million bales of in the last year of his party’s government. He said that in all the three major crops Pakistan production was less. He said one would of course be asking the question whether suspicious officials who were facing serious charges of corruption and 0.14 million tons smuggling of urea were behind the decline in production of agriculture sector.
He said that without the help and involvement of Punjab government, smuggling of urea was not possible and on top of that those flour mills which were provided thousands of tonnes of flour, did not consume any electricity which implies that those flour mills had not done milling and sold the wheat to Afghanistan. He said that the government was providing subsidized gas to the fertilizer companies.
He said that agriculture sector was a low hanging fruit but Pakistan is importing edible oil, cotton and wheat and this year the country would be facing Rs35 billion trade deficit and current account deficit of over $15 billion as exports would be $30 billion and remittance $30 billion. He said that commodity prices have significantly increased during three and half years of previous government primarily because of devaluation of rupee, flawed economic policies. He said of course increase in international prices was also one of the factors.
He said that the Covid was a shock for the economy; however, it was good financially for the country because the country was recipient of $4 billion because G20 countries had not asked for repayment and IMF provided $1.5 billion emergency fund and the country also borrowed from global level but the government did not provide relief to the people during that time. The government has neither increased tax to GDP ratio not reduced expenditure.
He said that Pakistan Tehreek-e-Insaf government added Rs 20,000 billion debt during the last three and half years compared to total Rs 24,952 billion accumulated by all the government since 1947 to 2018.
Replying to questions, he said that he met with the Saudi finance minister and requested not to withdraw Saudi deposits from the SBP becoming due in December 2022.
I was informed that the request would be sent to the Saudi royal court for approval, he said adding that he also requested for extension in Saudi oil facility and additional Saudi deposits.
Finance Minister said that he was given an offer on additional deposit but it would be inappropriate to talk about it further. He said that he did not accompany the prime minister during his trip to the UAE.
Copyright Business Recorder, 2022