POL products' prices

Oil and Gas Regulatory Authority's (Ogra's) recommendation to the Abbasi-led administration to raise prices of petroleum and products in line with the rise in their international price on the last day of the month, which coincided with the last day of its tenure, was deferred on political grounds. This was not only gross dereliction of duty but also passing the buck onto the caretakers by the PML-N government and merits criticism. The night watchman Finance Minister Miftah Ismail provided a justification in a tweet: "since our government ends today, and new prices of petrol, diesel and kerosene oil go in effect tomorrow therefore the Ministry of Finance's recommendation to the Prime Minister has decided to leave their prices unchanged till 7 June so that the incoming government can decide the new price." This logic is severely flawed on three counts. First and foremost, Ogra routinely submits a summary recommending price adjustment of petroleum products reflecting fluctuations in their international price to the federal government to enable it take decisions that would have serious revenue implications for the government. According to a Business Recorder exclusive, the government will suffer a loss of 13 billion rupees by keeping oil prices unchanged for one week - 10 billion rupees on account of sales tax and 3 billion rupees on account of petroleum levy. This is a significant loss in a year where the budget deficit is expected to be considerably higher than the heavily doctored data released in the budget documents for next fiscal year with independent credible sources indicating a deficit in excess of 7.4 percent - or a whopping 1.6 percent differential. The shortfall of 13 billion rupees in the current year's budget as a result of deferring the decision to raise prices of petroleum and products till 7 June would be felt by the caretaker Finance Minister.
The Caretaker Finance Minister, Dr Shamshad Akhtar, has already requested revenue figures from Federal Board of Revenue but she must also seek a more accurate assessment of expenditure allocations till the end of the current fiscal year on 30 June - allocations that do not include payment of salaries to the dysfunctional Pakistan Steel Mills employees with Eid only a week away as well as providing guarantees to borrowing by other public sector entities, including PIA which would raise the country's indebtedness.
Secondly, it is extremely ironical that while the PML(N) government did not hesitate to present a tax amnesty scheme applicable till 30 June, a whole month after the end of its tenure or in presenting the budget for next fiscal year (July to June 2018-19) yet it felt no compunction at all in deciding that as the PML-N government would not be in power on 1 June let the caretakers decide. This explanation not only smacks of irresponsibility, evident because the decision will widen the budget deficit with consequences on inflation which would impact on the common man, but also an inability to take challenging and critical economic decisions with negative political repercussions at the present moment in time given that the general elections are just around the corner.
Thirdly, the Election Bill 2017 stipulates that the caretakers be restricted to activities that are 'routine, non-controversial.' This routine decision should have been taken by the elected government as it is taken on the last day of each month.
It is extremely unfortunate that the caretakers will not only be dealing with major macroeconomic issues prevailing in the economy today but would also be required to take decisions that should have been taken by the Abbasi-led administration. They would however be required to decide on prices of petroleum and products, and therefore taxes on this imported item, on the last day of June as well as the last day of July if an elected government is yet to be installed by that time.