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ISLAMABAD: Federal Minister for Finance and Revenue Miftah Ismail on Thursday said that so far the government has no intention to increase consumers’ gas price by 45 percent from July 1st, 2022, acknowledging that the Oil and Gas Regulatory Authority (OGRA) has forwarded a summary in this connection to the Petroleum Division.

Speaking at a digital conference organised by the Press Information Department (PID) here, he said that Pakistan is not in a position to control global crude oil prices as the country is heavily relying on the crude oil imports, adding globally the crude oil prices owing to various reasons are on the rise and currently it was trading above $123 per barrel. He said that the government of Pakistan at present has no option other than passing on the impact to the end consumers.

He further said that diesel consumption in Pakistan has witnessed a 25 percent increase and the government was still selling the commodity below the market price but cannot continue paying Rs80 billion subsidy.

Despite export receipts and workers’ remittances both reaching record high levels during the first nine-month period, import payments have registered a “sizable, broad-based increase” which has widened the trade deficit. He said that to resolve the current account deficit Pakistani exporters need to increase their exports. The major contributor to the higher current account deficit was the 55.5 percent increase in the merchandise trade deficit during Jul-Mar 2022.

Responding to a question, the minister said that the government has asked the automobile producers and auto part manufacturers to help Pakistan increase the country’s export.

“These payment pressures manifested on the inter-bank PKR-USD exchange rate, which depreciated 14.1 percent during Jul-Mar 2021-22. The SBP’s foreign exchange reserves also came under pressure from Q2 onwards, dropping by $5.9 billion during the first nine months of the fiscal year to $11.4 billion by end March 2022. Therefore, during this period, the current account posted a deficit of $13.8bn, or 3.6 percent of GDP, against a deficit of $0.5bn last year.”

Miftah said that years before, the exports were around half of the imports. However, the export-to-import ratio stands at 40:60 now, he said, adding that Pakistan could only finance 40 percent of its imports through exports and for the rest, it had to rely on remittances or loans which has plunged the country into a balance of payment crisis.

“We also need inclusive growth. We have always facilitated the elite so they can boost the industry and benefit the economy. This is one strategy, but when we give privileges to the elite, then our import basket increases,” he said.

A rich person spends a lot on imported items as compared to a low-income person, he said, adding that the government should financially empower the low-income groups to boost local production.

He said that the government will not put an additional tax burden on the poor but will enhance taxes for rich people, adding that additional taxation measures will be taken with regard to the cigarette industry.

The finance minister added that since the energy prices are too high in Pakistan; therefore, the local industry is “uncompetitive and also shuts down at times”, adding that the government will provide all assistance to the local industry to stay in competition with other regional and global industries. He further said that to deal with the problems like balance of payments and current account deficit the country has to boost up its exports.

Responding to a question, he said that the government has no plan to impose any tax on newsprint material but will try to compensate the media industry as the new print material prices global have reached an all-time high level of $1,100 per ton.

Miftah said the gas supply for all industries has resumed after being shut for some time, noting that the supply to industries would not have been stopped had the PTI government entered long-term agreements.

The previous government did not make long-term plans, forcing Pakistan to buy energy and oil at expensive rates, which is worsening the economy of the country. He said that the government of Pakistan is going to import three million tons of wheat to meet the local demand, saying globally wheat prices also have reached to a record high level of $500 per ton. He once again clarified that Imran Khan-led government had not signed any agreement with Russia for the purchase of cheap crude oil or wheat.

Answering another question, the minister said that almost 65 percent of the tax revenues were distributed among the federating units and therefore, the provinces must increase spending on the health and education sectors as they were not liable to pay the international loans taken by Pakistan.

He said that imposing tax on the real state sector was a provincial subject and provinces are independent to take any action in this connection.

Copyright Business Recorder, 2022


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