Finance Minister, Miftah Ismail, on Friday, consented to the International Monetary Fund’s (IMF) suggestion to reduce fuel and power subsidies and end the business tax amnesty scheme. He also pledged to pursue structural reforms to boost a challenges-hit economy.
According to the government officials, the government is providing approximately Rs. 21 per liter subsidy on petrol, Rs. 51.52 per liter on diesel, and Rs. 5 per unit on electricity to carry on the relief package announced by former prime minister Imran Khan on 28 Feb 2022. All of these subsidies are currently being financed through the government’s reserves.
The government stands to lose Rs. 2.5 billion per day and Rs. 36 billion every fortnight, if the subsidy on the energy sector is continued.
“They’ve talked about removing the subsidy on fuel. I agree with them,” Miftah said, speaking at the Atlantic Council.
“We can’t afford to provide these subsidies. Therefore, we’re going to have to curtail this,” he said. The amount of subsidy has surpassed the total expenditure of running the civil government. However, Miftah added that some targeted subsidies should remain for Pakistan’s poorest amid sky-high global prices.
Ismail said that Pakistan, the world’s fifth most-populous nation, needed to move to a new economic model by removing obstacles and promoting exports to the world.
“We have such an elite-benefitting country that almost every subsidy that you can speak of actually goes to the richest people,” he said.
He said that former prime minister Imran Khan, seeking to avoid ouster, set a “trap” for his successors through heavy subsidies on fuel and electricity along with a tax amnesty scheme for businesses. He further added that these measures aimed to derail a disbursement from the IMF loan.
“He gave an amnesty to businesses for setting up factories so that they don’t have to pay taxes, or even if they evaded taxes, that’s ok,” Ismail told reporters at an event organized by Pakistan’s embassy.
Miftah said his immediate goal was reining in double-digit inflation – a target complicated by lifting fuel subsidies – and kickstarting job creation.
Earlier this week, Miftah lambasted the Pakistan Tehreek-e-Insaf (PTI) for derailing the IMF programme as he expressed the government’s resolve to get the programme back on track to revive the ruined economy.
The minister said that the incumbent government would do whatever was necessary to restore the programme. He said that the government could reduce public sector development spending with other necessary budgetary discipline arrangements.
“We will restore the programme. If the government has to tighten its belt, it will do so,” he said, adding that no extra burden would be put on the people.
Further criticizing the former PM, Miftah said the IMF programme was derailed by Imran Khan, and now, it was massively off-track. “Now we will have to convince the IMF,” he added. The Finance Secretary briefed the Federal Cabinet on the IMF programme, and as per him, it was “5,300 per cent off-track,” the minister added.
imran khan ais ane vali hakomat keliye kafi nuksan kahre kar ke gaya hai. humare mera mey nahi socha bht load shedding vagra ke masail..
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