Rebutting reports, Finance Minister Miftah Ismail Tuesday clarified that the government had no plans to increase the prices of petroleum products. “There will be no increase in prices today, and there is no summary or plan to raise prices,” he tweeted after media reports quoted him as saying that petrol prices will move up further. “In the pre-budget seminar, I never even spoke about the petroleum prices. Channels running these tickers are doing a disservice to their viewers,” Miftah said. Earlier, in his address to a day-long pre-budget business conference, Miftah said had the government taken decisions in line with ex-prime minister Imran Khan and former finance minister Shaukat Tarin’s deal with the International Monetary Fund (IMF), the price of petrol would have been Rs300 per litre.
“The previous government had agreed with the IMF that they would not give subsidies,” the finance minister said, lashing out at the Khan-led government for messing up the economic policies of the country, says a news report. Talking about the IMF deal, the finance minister said he was “very confident” about negotiations. Miftah said the PTI government had increased circular debt from Rs1,000 billion to Rs2,500 billion and the government paid Rs1072 billion in power subsidy this year, out of which $400 billion went to the circular debt. He said electricity prices were being subsidized by Rs16 per unit or kilowatt-hours. Miftah said the petroleum sector had also amassed a circular debt of Rs400 billion, while the SNGPL incurred losses over Rs200 billion last year and the PSO circular had increased to over 500 billion. The finance minister said the current government had taken ‘very tough’ decisions, which were not easy for any prime minister, but the government was losing Rs85 a liter on diesel and Rs69 a litre on petrol, incurring losses of Rs120 billion a month.
He again said the Imran Khan government signed the agreement with the IFM that it will not only remove all the subsidies, but also impose Rs30 in PDL on petrol and diesel. “Today, if I had followed the agreement [signed] by Shaukat Tarin and Imran Khan, I would have been either fired from my job or petrol and diesel would have been sold at Rs300 a litre,” he said. He said Tarin had levied Rs17 a litre PDL and was pushing it up by Rs4 every month but when Imran Khan felt his government was about to fall, he laid a trap. The finance minister said when Imran Khan visited Moscow in February, the only thing newspapers reported was that he had discussed importing wheat and gas from Russia and that there was no question of oil imports.
Miftah said then Energy Minister Hammad Azhar lingered on for one month and five days and on March 30, only days before the end of their government, he wrote a letter to Russia which never responded. Miftah predicted that the country’s GDP will grow by 5%-6% and the government would control the high rate of inflation. He also revealed that the government had prepared a progressive fiscal budget, with the deficit reduced to below 5%.”We have taken tough decisions; it is not easy for any prime minister to allow such an increase in fuel prices but we were taking losses. We incurred more than 120 billion rupees in losses per month,” the minister stated. Miftah said the government had re-engaged with China, Saudi Arabia and the United Arab Emirates (UAE) among other countries. “China agreed to re-roll their programme of $2.4 billion after Foreign Minister Bilawal Bhutto met with Chinese Prime Minister [Li Keqiang]. China has reduced the interest rate from 2.5% to 1.5% which will save the country $23 million,” Miftah added.
He further stated that the KSA had also agreed to increase the “line of oil” provided to Pakistan and provide the country a revolving credit of 100 million dollars. Miftah stated that the incumbent government inherited a country that had the third highest inflation in the world, with 20 million people who fell below the poverty line, and mass unemployment. He added that the country’s debt servicing had increased exponentially due to the volume of loans the PTI government took on. The finance minister also discussed the targeted subsides announced – a one-time Rs2,000 per family subsidy for 14 million households. The Rs2,000 will be given in June and it will cost the government Rs28 billion. Besides 7.3 million BISP beneficiaries, the package covers 6.7 million households with poverty scores below 37. The minister stated that the model of Pakistan’s economy was “inherently flawed”. “We make the rich richer,” he said.
Miftah stated the industry and consumers rely heavily on imports, which push the current account into a deficit. He added that Pakistan’s economy emphasizes import substitution and not export promotion, a model that that has persevered in various developing countries. The minister also commented that the country has no major export other than textile, as the agricultural sector fails to remain productive. Miftah said the country needed $41 billion dollars in the next 12 months, adding that he was “very confident” about it happening. “We have to pay back $21bn next year. I am guessing that the outside limit of the current account deficit will be $12bn […] I think that we should have reserves of at least three months […] So we need $41bn over the next 12 months and I think it will happen,” he said, adding that he was “very confident”, without elaborating further.
Ismail said that the government had prepared a “very progressive budget” but would also focus on fiscal control and consolidation, vowing to reduce the budget deficit. He opined that Pakistan’s growth model was imperfect as the current account deficit always became an issue for economic growth. “Our imagination is limited and finance ministers meet with people like you and make tycoons richer,” he told the businessmen. “When we do that, our imports increase because our consumption basket is very big,” he said. The minister said average debt during the PTI government’s tenure was Rs5,177bn, while for the PML-N it was Rs2,132bn which was used for infrastructure development.
He said that over the span of 71 years, the country’s rulers – including military dictators – took out loans of Rs25,000bn while former premier Imran took out loans worth Rs20,000bn over a span of four years. “This is 80 per cent of all loans taken by the entire government of Pakistan in the previous 71 years,” he said, adding that this had resulted in an increase in debt servicing. “The more you borrow, the more you have to pay.” Talking about the problems being faced by businessmen in the country, he said that the government would ensure the supply of gas and power. news desk
