KARACHI: Pakistan Tehreek-e-Insaf (PTI) economic team has suggested immediate rescheduling of entire external debt and fresh financing of up to $15 billion in order to avert the default.

Addressing a press conference on Friday, former Federal Finance Minister Shaukat Tarin and Tehreek-e-Insaf Spokesperson for Economic Affairs Muzzammil Aslam criticized the PML-N government for not passing on the benefits of declining oil prices in the world market to the general masses.

They said that oil prices in the international market are gradually declining; however, the sitting government has failed to pass on the benefit to the consumers. Oil price was $94 per barrel in the first week of November and now it has reduced to $74 per barrel, they mentioned.

“The government has not passed on the impact of low petroleum prices and consumers were taxed by Rs 36 billion of Petroleum Development Levy (PDL). This is contrary to what they have been claiming in public,” they added.

Tarin said that inflation (CPI) rose to 23.6 percent with the core inflation at 14.5-18.5 percent, and the inflation is likely to go up further, as the government has decided to increase gas prices and impose more taxes, as the government is running short on revenues and long on expenses.

In addition, the government’s debt payments will increase as the SBP has increased the discount rate by 100 basis points and the IMF is also demanding additional taxes of Rs.800 billion, he mentioned.

He urged the government to provide relief to the people and immediately restart incentive schemes and programs like Kamyab Pakistan Program, Kamyab Jawan, Sehat Card, Ehsaas Ration Pakistan and also start the targeted subsidies on fuel, fertilizers, electricity and gas.

Talking about ‘’default’, they said that SBP’s reserves are gradually depleting and declined to $7.4 billion due to massive external debt payments. The SBP has to make payments of $1 billion in the next 3 to 4 days and this will further reduce the reserves. Reserves are likely to reach $6.4 billion next week compared to $16.4 billion before the Vote of No Confidence against Imran Khan.

“If we add up all the inflows and rollovers the government is still short by almost $16-20 billion; therefore, there is a need to reschedule the entire external debt and obtain fresh financing of up to $15 billion to revert the default”, they said.

They said that the overall economic situation is worsen as exports in November are down 18 percent and home remittances by 9 percent YoY and this decline is expected to increase as there is almost a 10 percent difference in official and unofficial exchange rates.

“Exports may further hurt as exporters’ LC for raw materials and intermediate goods are not being opened due to shortage of reserves. Therefore, the overall trade deficit is down due to lower oil import bills due to lower prices in the world market. In addition, foreign direct investment has also reduced by 75 percent over last year.”

During the briefing, Muzzammil Aslam raised several questions and said that there are reports that international banks are asking for 6-11 percent confirmation on LC charges. Resultantly, the landed prices remain higher.

“Moreover, as per reports Petroleum Division has written to SBP to create one Nastro account of $500 million to avoid the LC charges. But SBP refused and advised the PD to use diplomatic channels,” he said. He asked the government to clarify these issues.

Copyright Business Recorder, 2022

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