The Government of Pakistan has found a “specific fiscal space of Rs. 250 billion” for providing relief in energy prices, according to Executive Director Sustainable Policy Institute (SDPI), Dr. Abid Qaiyum Suleri.
The social policy analyst, who serves on the Prime Minister’s (PM) Economic Advisory Council, remarked on Twitter that the Federal Minister for Finance and Revenue, Shaukat Tarin, and the Macro-Economic Advisory Group have been working on different options to provide relief to consumers, and yesterday’s announcement of economic relief measures was not “a knee-jerk reaction to any particular event.”
🧵The govt of #Pakistan has found a specific #fiscal space of 250 Bln, which is being channelised to provide relief in #energy prices. Here is the break down #PMIKaddressToNation
— Abid Qaiyum Suleri (@Abidsuleri) February 28, 2022
Discussing the PM’s groundbreaking measures, Dr. Suleri started by explaining that Rs. 1.5 billion worth of High-Speed Diesel (HSD) and Motor Spirit (MS) Petrol are consumed per month. He clarified that the flat Rs. 10 per liter reduction in petrol and diesel prices translates into a fiscal relief of Rs. 15 billion per month for the nation.
Regarding the revision in country-wide electricity prices, Suleri said the government’s commitment to decrease electricity prices at the rate of Rs. 5 per unit (which includes a slab margin of Rs. 2-5 on commercial meters) equates to a monthly impact of Rs. 17.5 billion.
He pointed out that the four-month subsidy (until next year’s budget) on petrol and diesel roughly equals Rs. 130 billion. Moreover, with a cushion for petroleum levy on associated products, the price movement of crude oil translates to Rs. 93 billion.
In a nutshell, Dr. Suleri remarked that the forthcoming cushions in electricity (Rs. 13 billion) and petroleum prices would offer a four months’ worth of financial impact to the tune of Rs. 237 billion.
4) Cushion for PL, Exchange Rate, #CrudeOil price movement = 93 Bln
Cushion for electricity = 13 Bln
Four months financial impact 237 Bln. #PMIKaddressToNation
— Abid Qaiyum Suleri (@Abidsuleri) February 28, 2022
To recall, Prime Minister Imran Khan, on Monday, promulgated an Rs. 10 per liter reduction in the price of petrol and diesel. Among a host of different relief measures, he also announced a reduction in the cost of power by Rs. 5 per unit, the construction of dams, an increment in handouts to Ehsaas beneficiaries, provision of interest-free loans to the youth and farmers under the government’s flagship Kamyab Jawan Program, and the facilitation of setting up new businesses.
The premier reaffirmed that the IT sector, which comprised businesses and freelancers, had been spared from paying taxes and that they would be allowed to move money around without limits. He expressed his delight that banks had been persuaded to lend to low-income people, noting that Rs. 150 billion in loans had been authorized thus far.
