IMF should not worry about PM’s relief package: Tarin

ISLAMABAD: Finance Minister Shaukat Tarin has stated that the International Monetary Fund (IMF) should not have any concern about the prime minister’s package for a slash in petrol and diesel prices, as well as, electricity tariff because neither the budget deficit nor borrowing would be increased.

Addressing a news conference here on Wednesday, the finance minister in response to a question said that in his opinion the prime minister perhaps should not have reacted publicly but all he stated that the EU should not pressure Pakistan. He highlighted that the EU did not react to Indian action in Indian occupied Kashmir.

The minister said that this package was consulted with the IMF, as much as, was needed and fiscal space would be created to meet the financing needs of the package. He explained that pending four-five years’ dividend of state-owned enterprises (SOEs), the PSDP and some savings of the Covid Ehsaas programme would be used to finance the prime minister’s package. He said that Rs1.2 trillion oil companies’ dividend is outstanding and Rs200 billion from it would be utilised for the prime minister’s package and the remaining would be used for circular debt settlement.

The remaining dividend would be used to reduce the circular debt, he said, adding in addition to contributing to the annual development programme, they will also withdraw money from the Corona Fund, so the IMF should not have any concern about the prime minister’s relief package for petroleum and electricity prices.

Reprising populist rhetoric, PM cuts rates of POL products, power

The finance minister said that the government would tell them that the people are already on the streets, so the Fund should show some leniency; otherwise, more people would be out on the streets against the government.

Tarin said that economic targets agreed with the Fund till December have already been achieved. He said that in order to save the people from the effects of the international ‘commodity Super Cycle’, Prime Minister Relief Package on petroleum products and electricity was needed owing to increase in petrol price. The government would be providing over Rs104 billion subsidy monthly on petroleum products- Rs78 billion monthly for the reduction in petroleum levy and reducing the sale tax to zero level before the prime minister’s package and additional Rs27.5 billion monthly would now be provided after the package.

He said that fortnightly, Rs39billion subsidy was being provided on account of sales tax and petroleum levy and now an additional Rs13.90 billion would be provided after the package. He said on the consumption of electricity up to 700 units Rs136 billion would be provided.

The minister claimed that trade deficit and inflation declined in February 2022 as compared to a month before and reduced to 12 percent from 13 percent and if the international prices factor is excluded, the domestic inflation would be around 10.8 percent. At present, he said that international commodity prices were all time high, adding owing to the ‘global super cycle’ no one can predict as to when this trend would be reversed.

He said the government would be able to achieve a revised tax collection target of Rs6,100 billion for the outgoing fiscal year.

He said that a ring-fenced and targeted amnesty scheme for the industrial sector has been provided for the promotion of industries in the country and those who have availed previous amnesties would not be entitled and investment would be only for the establishment of industries.

A revival of sick industries has been provided, as well as, overseas Pakistani investors have been given a five-year tax holiday for investment in the industrial sector.

The finance minister said that the IT sector is a priority of the government and the exports of the IT sector could increase US$50 billion in the next four to five years. The government has provided incentives to the IT sector including zero CGT, etc. He said that Rs500 billion was invested in the targeted construction sector.

In 2019, Pakistan was better than three out of 10 countries in the region in terms of investment and business. Of the OICCI’s 207 companies, 68 percent expect their profits to improve in the coming years. The government is trying to address their concern regarding continuity in policies and a strategic framework is being prepared in this regard. The OICCI has also announced to hold international trade and roadshows in the world.

He said that all the economic indicators are positive, Kamyab Pakistan, 97 percent satisfaction level of Sehat card, as well as, growth, moderate inflation and bottom-up approach would leave no place to the opposition for the next election and that is why they are trying to remove the government.

He said that during the recent visit of the prime minister to China, 22 major Chinese companies met with him and a discussion with China was held on four strategic areas: investment in SEZs, agriculture, help in the IR sector, and reduction in the trade gap.

He said he has no clue from where the $21 billion figure came.

He acknowledged that the primary balance would be 0.5 percent negative by the end of the ongoing fiscal June 2022.

The minister said that PL and other incentives would cost the government Rs800 billion to Rs900 billion subsidy; otherwise, the tax collection would have been Rs7000 billion.

To a question about the EU, he said that in his opinion the prime minister perhaps should not have reacted publicly, adding that all he stated that EU should not pressure Pakistan.

He highlighted that the EU did not react over Indian action in Indian occupied Kashmir. He said that in his opinion, Pakistan’s foreign policy should have been independent and should not be fearful of anyone, although the EU was a major export destination after the US for Pakistani goods.

Copyright Business Recorder, 2022