PBC proposes targeted fuel subsidy, reduction in work week

Pakistan Business Council (PBC), one of the country’s leading economic advisory bodies, has proposed a reduction in the working week to save the country's vital foreign exchange reserves while urging the government to introduce a targeted subsidy programme in the wake of petroleum products price hike.

Taking to Twitter, PBC on Friday lauded the government’s latest decision to increase rates of petroleum products.

“The decision to partially withdraw the general subsidy on fuel is belated but a step in the right direction to stem the pressure on the twin accounts,” said the PBC.

The government on Thursday night announced an increase in petroleum products’ prices by Rs30 per litre in an effort to revive the stalled $6-billion Extended Fund Facility (EFF) programme of the International Monetary Fund (IMF).

Addressing a presser, Finance Minister Miftah Ismail expressed hope that reaching an understanding on staff-level agreement with the IMF would now be easier and constructive discussions are being held with the Fund on revival of the EFF.

Investors rejoiced at the government decision, as the benchmark KSE-100 index jumped over 900 points in intra-day trading, while the rupee also gained substantial ground on Friday.

In another tweet, the advisory body urged the government to introduce a targeted fuel subsidy programme for lower-income segments.

“It would be appropriate to accompany the phasing out of general fuel subsidy with introduction of targeted subsidy for the most deserving. That would limit any political fallout” said PBC, while adding that the government should not fully reverse its measures.

Last week, the PBC had said that the resumption of the IMF loan facility is the only way to bring much-needed economic stability.

“All roads to restoring economic stability lead through IMF,” the PBC said in a series of tweets. “Without the revival of the programme, no further help from friendly countries is likely,” said the business advocacy body.

Meanwhile, the PBC also called for the implementation of conservation measures including a reduced working week, or work from home strategy. Working one day less a week could save $167 million per month with no political fallout, it said.