The Economic Advisory Committee has recommended increase in gas prices for reducing the size of the subsidy the government is bearing on gas prices. The committee also suggested the government that it should give incentives on CNG kits purchase to promote CNG use in order to cut oil import bill.
The EAC here on Friday met Federal Minister for Finance, Privatisation and Investment, Syed Naveed Qamar in the chair to review the economic situation and suggest the ways and means to the government to take the economy out of bad patch.
It asked the government to reduce interest expense through transformational debt management besides developing an effective public finance management system to implement fiscal discipline in letter and spirit to reduce loans burden. Sources said the committee observed that the government and public sector deposits were in low yielding bank accounts, which almost match the federal government's overdraft with SBP.
It further noted that the federal government should strengthen the central debt office for better debt management and effective hedging of the government's cross-currency exposure. It suggested a borrowing calendar, covering various maturities of debt needs to be pre-announced, while the market should be allowed to determine the price issue.
The committee was of the view that the process would allow crystallisation of a government 'risk-free' benchmark rate, necessary for the development of an active public and private 'Bond market. The EAC also proposed different measures to the government to reduce pressure of the subsidies on the economy. It suggested the government to pass on actual petrol and diesel prices to the consumers in phases.
The meeting also discussed to prepare a plan for issuing 'fleet cards' or 'fuel stamps' to the motorcycle users for providing them fuel on comfortable price as this mode of transport is generally practised by the majority of the people. The committee also recommended the government to implement more ambitious plans for energy conservation. It recommended the authorities to convert molasses to ethanol and blend with fuel.
Pakistan is exporting molasses without taking into account that the entire sugar producing world was using it for converting it into ethanol to blend for fuel. It wanted that the Railways system should be restructured to make it a profit-making entity.
Prime Minister Syed Yousuf Raza Gilani had constituted EAC soon after the elections for giving the government inputs on economic issue. The committee meets to take key issues of the economy and suggest the government short medium and long terms measures for improvement.
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