Former finance minister Shaukat Tarin on Saturday urged the government to seek relief from the International Monetary Fund (IMF), as the country continues its struggle against historic floods that have caused widespread loss of lives, devastation and displacement of millions.
“The government should seek relief from the IMF in wake of recent flooding,” said Tarin while addressing a press conference at the Karachi Press Club (KPC).
“We should also approach Russia and purchase oil at discounted rates, and give relief to the people,” he added.
Monsoon rains have submerged over a third of Pakistan, claiming more than a 1,000 lives since June and unleashing powerful floods that have washed away swathes of vital crops and damaged or destroyed more than a million homes.
Officials have blamed climate change, which is increasing the frequency and intensity of extreme weather around the world. They have estimated that Pakistan would sustain over $10 billion in losses due to floods.
Highlighting current economic indicators, the former finance czar of Pakistan slammed the performance of the current government.
“The Consumer Price Index (CPI) based inflation rate has hit 27.3% in August, while the Sensitive Price Indicator (SPI), recorded an increase of 45.50% and that too without factoring in the flood impact.
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“Electricity rates have increased from Rs16 last year to Rs38, and if we add the adjustments it has been raised to Rs50 per unit. Moreover, gas charges are to be raised by 53%, as per the IMF’s latest conditions,” said Tarin.
The Pakistan Tehreek-e-Pakistan (PTI) senator said that the rise in inflation would increase government debt servicing by Rs1.5 trillion.
“The present government in its four months has raised the country’s debt by Rs9.7 trillion, whereas the US dollar has started to appreciate against PKR. This will add to the pressures on the already downtrodden common man. The government would impose more taxes, as they have accepted the harsh conditions of the IMF, which will have a ripple effect,” said Tarin.
The ex-finance minister said that during the PTI government tenure economic fundamentals were very strong.
“We would have raised the electricity rates by Rs2-2.5 per unit, whereas taxes to the tune of Rs150 billion were to be imposed. Our emphasis was towards the broadening of tax bracket to take the tax collection to Rs8 trillion,” he said.
Tarin said that instead of announcing heavy increases in prices of petroleum products and electricity rates the government should adopt a gradual approach, as people are under a lot of stress due to floods.
“We should focus on improving our tax collection, by introducing progressive taxation methodology. In the last two months the sales tax collection has shown a negative growth,” said Tarin.
Earlier, Federal Finance Minister Dr Miftah Ismail during a discussion held at the Institute of Business Administration (IBA) on Friday said that going to the IMF was a difficult political decision, but it was the last resort.
During his presentation, he criticised some measures taken by previous governments which created challenges for the economy, pushing the country toward the brink of bankruptcy. He justified the IMF programme by stressing that it was only to save Pakistan that harsh measures were undertaken.