ISLAMABAD: Conceding concerns over heating from Pakistan economy, minister of finance Shaukat Tarin on Wednesday announced steps — regulatory duties and cash margins — to curb imports before negotiations with the International fund (IMF) on the proposed increase in electricity rates to revive the $6 billion Extended Fund Facility (EFF) suspended since last financial year .
Speaking at a hurriedly called press conference along side prime minister’s special assistant Jamshed Iqbal Cheema and Minister of State for Information Furrukh Habib, the minister of finance said the govt would immediately reduce the costs of vegetable ghee, sugar and wheat across the country by reducing taxes and providing cash subsidies to 40-42 per cent population at rock bottom .
Though sounding anxious over questions on his own future within the government within the remaining 25 days of his constitutional tenure ending October 15 and people challenging the costs quoted by the govt , the minister of finance rejected uncertainties about his portfolio. “I am not going anywhere. I trust the prime minister who has promised to form me a senator,” he said.
Responding to an issue , the minister said the general revenues had improved 45pc by exceeding the target by 24pc primarily due to increasing imports — a phenomenon showing economic process . Initial estimates also suggest 160pc increase in cotton output thus far , showing signs of agriculture uptick, besides large-scale manufacturing — all indicators of growth.
“However, my concern is that it shouldn’t overheat to A level that makes problems for the rate of exchange and balance of payment,” the minister said, adding that it should even be kept in mind that prices were the very best globally in 10 years due to production and logistic problems and Pakistan couldn’t stay aloof.
Therefore, he said, the govt had decided to impose regulatory duties and 100pc cash payments for opening of letters of credit for non-essential luxury imports. He didn’t disclose the import items that might come under these taxation measures, but said these steps were important to chill down the heating economy.
He said some quarters were suggesting that GDP was heading beyond 5pc growth and “we want to regulate it; we don’t want to leap to 6-7pc growth quickly that would be problematic and unsustainable”.
Talking about currency devaluation, the minister of finance said pressures built up due to higher imports as oil and LNG prices increased significantly in six months, automobile imports, dollar outflows to Afghanistan rather than inflows within the past and perceptions that speculators and importers also exploited.
However, the important effective rate of exchange (REER) was almost on the brink of market rate with about Rs2 per dollar difference.
Responding to an issue , Mr Tarin said the problems with the IMF remained unchanged because the two sides had agreed before the budget to travel into recess and obtain back with half-moon performance because the government committed to delivering the revenue target of Rs5.8 trillion and addressing circular debt with alternative means rather than increasing taxes on those already taxed and raising energy prices that might reverse the efforts in hand to support the poor.
The minister said the govt performed well on revenues and therefore the flow of circular debt had also been scaled down. “Now that three months of recess were over, we might sit together over subsequent few days and request them [IMF] to permit us to continue performing on our directions. There are not any pre-conditions and prior actions. We stand by our principled stance and can hold negotiations. Only time will tell how the 2 sides negotiate,” he added.
Mr Tarin said the govt had decided to right away reduce vegetable ghee/oil price by Rs45-50 per kg to Rs290 from Rs340 which of flour to Rs55 per kg. He said the government’s decision to extend wheat release price to Rs1,950 per 40kg from Rs1,475 had become effective and under an appointment flour mills would offer 20kg bag for Rs1,100.
Also, sugar are going to be available across the country at Rs89.75 per kg to supply relief to 40-42pc population. He said the govt would next month provide cash subsidy on flour , sugar, ghee and pulses.
The minister said the magistracy system abolished by the Musharraf government had created tons of problems and he had asked the prime minister to bring that mechanism back, otherwise subsidies, tax relief and strategic reserves of essential commodities wouldn’t deliver the specified results. The prime minister had agreed to make sure it within a few of months, he added.
SAPM Cheema chipped in with selected numbers to say that Pakistan is that the cheapest country within the world under the PTI government and argued that in dollar terms prices of petroleum products, wheat and sugar were the most cost effective in comparison with the PML-N and PPP governments of the preceding decade.
When challenged with the particular prices within the market and comparable prevailing numbers in India, Mr Tarin took it personal, saying he wouldn’t allow suggestions to prove him wrong with general statements and he could ask the team that prepared these numbers to match again.
Mr Tarin said that despite global price spiral, inflation had declined in Pakistan due to the government’s balanced policies. He said food inflation had also gone down over the past two years. He said the general prices of essential food commodities had increased within the world because the prices of sugar went up by 80pc from $240 per tonne in 2018 to $430 and vegetable oil by 58pc from $760 per tonne to $1136, while in Pakistan the costs of vegetable oil increased by only 33pc.
The minister said that despite a hike in prices of petrol, diesel and other petroleum products within the international market, prices in Pakistan were very low compared to regional countries. He said the govt had reduced petroleum levy and nuisance tax to supply relief to the masses.
In addition, he added, the govt would make scientific engineering process to analyse profits within the supply chain and squeeze the role of middlemen administratively. the govt was also building strategic reserves of pulses and onions to assist streamline prices, he said, adding that the govt would build commodity warehouses and cold storages in order that farmers and purchasers are linked directly without involving middlemen.
The minister said the Competition Commission of Pakistan had been directed to require measures against cartelisation of ghee manufacturers. He said the govt was performing on initiatives to reinforce income and affordability of individuals , adding that Kamyab Pakistan programme would be launched by the top of this month to mention the lower segments of society.