IMF programme revival govt’s first priority: Miftah
ISLAMABAD – Finance Minister Miftah Ismail on Wednesday said that first task for the present government’s economic team is to ensure revival of the stalled IMF programme, which required five prior actions including increasing oil and electricity prices and introducing tax measures.
Talking to a selected group of media, the finance minister said that his first task is to revive the stalled IMF programme. The IMF has asked for five actions for revival of the loan programme including increasing prices and taxes on oil prices, withdrawing tax amnesty scheme for industrialists, increasing fiscal savings, enhancing power tariff and introducing tax generation measures.
Miftah said that the government would withdraw tax amnesty scheme and increase the fiscal saving by slashing Public Sector Development Programme (PSDP) by Rs100 billion to Rs600 billion for the current fiscal year.
Meanwhile, the government would ask the Fund to delay the revenue generation measures for two months, till June when the new budget would be announced. He informed the media that IMF had asked the previous government to give surplus primary budget. However, it would be in deficit.
The Finance Minister and Minister of State for Finance Dr. Aisha Ghaus Pasha would leave for Washington today to join Pakistan’s economic team, which is already holding talks with the international financial institutions. Miftah Ismail said that he would hold meetings with senior officials of the IMF, World Bank and Finance Ministers of several countries including Saudi Arabia, Turkey and others.
He was optimistic that Pakistan would receive single tranche of one billion dollars from the IMF before announcement of next annual budget.
Finance Minister has once again criticized the former prime minister Imran Khan for keeping oil prices unchanged. He added that Imran Khan has bypassed the ministry of finance for keeping oil prices fixed till June 2022. He said that Economic Coordination Committee (ECC) of the Cabinet Committee (ECC) on Tuesday had approved Rs68.74 billion for immediate reimbursement of price differential claims (PDCs) to the oil industry on account of cheaper sales of petroleum products than the cost of purchase. Miftah said that the amount would further increase to Rs96 billion each in next two months. “How can we will give Rs150 billion monthly subsidy, or annually Rs1800 billion on oil prices, which is more than the defence budget”. It is not landmines for the economy but it is ‘atomic bombs’.
The Finance Minister said that Prime Minister Shehbaz Sharif has directed to put minimum burden on the people in terms of increasing oil prices. He said that the Prime Minister has directed to provide subsidy on wheat flour, ghee and sugar. Sugar would be available at Rs70 per kg at Utility Stores Corporation. The government would provide subsidy on these items, he added.
He clarified that the government would not slash the Benazir Income Support Programme (BISP) budget.
On a question about IMF’s demand of increasing income tax for salaried class, Miftah Ismail said this should be reduced as it is not increasing the overall tax collection of the Federal Board of Revenue (FBR).
He made it clear that government would honour all the sovereign agreements made by the previous government in its tenure. He said that Pakistan has asked China to rollover $4.2 billion debt.
Meanwhile, the government would also utilize credit facility of $100 million per month for LNG announced by Islamic Development Bank for Pakistan. On a question about external financing need, Finance Minister said that government needs $4 billion to finance the current account deficit before June this year. “We do not want that our foreign exchange reserves further decline”.
Miftah Ismail said that there is no reason behind currency depreciation at the moment. However, there could be manipulation in market, which could cause currency depreciation. “We have to be vigilant on market manipulation”.
He said that Pakistan’s external debt has increased to $102 billion from $75 billion in 2018 when the previous government took charge. Overall public debt has enhanced to Rs42.8 trillion from Rs24.95 trillion in 2018. The budget deficit has projected to swell to Rs5600 billion in current fiscal year as against over Rs1600 billion in five years of PML-N government.
He further said that the GDP growth has declined, poverty has increased and current account deficit has reached the same level $18 billion to $20 billion where PML-N had left in 2018. The circular debt of power sector has reached to Rs2500 billion from Rs1062 billion in 2018 when PTI took charge. Circular debt of gas sector has also increased to Rs1500 billion. He said that country is facing 7500 megawatt shortfall of electricity du to the poor planning of the previous government.