ISLAMABAD: Minister of State for Finance Aisha Ghaus Pasha said that structural reforms are the need of the country and the government wanted to protect the common man from their impacts.

Talking to the media after the meeting of the Senate Standing Committee on Finance, she said the kind of structural reforms that were needed would of course affect everyone because those had been delayed for decades. As a result, she said the country’s economic situation was dire.

When asked about the under consideration taxation measures, she said that no final decision on that effect had yet been taken as the prime minister had directed the economic team to undertake the working in a way that the common man was protected from their impact.

She added that the working would be shared with the prime minister in that regard and after his approval it also be shared with the Fund. The minister said the government was walking on a tightrope as on the one hand it had to protect the ordinary man, while on the other it would have to remain in the International Monetary Fund (IMF) programme and those two were contradictory situations.

‘All is not well’ on economic front: Aisha

She said the country had not undertaken much-needed structural reforms for decades and was now paying the cost in terms of the deterioration of the economic situation.

Pasha added that the government did not want to impose taxes, which would have a direct impact on the common man and consequently, weighing various options to protect the common man.

To a question about flexible exchange rate, the minister said the State Bank of Pakistan (SBP) determined the exchange rate on the basis of demand-supply situation.

She further stated that changes in terms of the exchange rate would become clear soon.

Earlier, the Senate Standing Committee on Finance meeting chaired by Saleem Mandviwalla deliberated on the refusal of LCs to the pharmaceutical industry.

Malik Arshad, president Pharmaceutical Association apprised the committee that the pharmaceutical industry was worth approximately $6 billion and its reliance on imports was around 93 percent but various banks had refused issuing of LCs to the industry.

Senator Mohsin Aziz claimed that banks were hesitant even to open LCs worth $500. He further added difference regarding dollar value in the open market and the State Bank was a major reason behind the decline of remittances inflow and boosting smuggling of dollars on the other hand.

Dr Pasha stated “this is an extraordinary situation and the country is facing a severe crisis and it is primarily owing to global inflation which can be seen worldwide.”

Moreover, keeping in view the current scenario the government had prioritised a few industries for issuance of LCs which include the pharmaceutical sector, the agriculture sector, and the industries which were involved in the manufacturing of basic necessities items, she added.

However, Dr Aisha Ghaus also ruled out default possibility reiterating that government was aware of the current situation and was working vigorously to cope with it.

The chairman of the committee was of the view that delay in issuing of the LCs can be seen but the government has not refused the issuance of LCs to the pharmaceutical industry. He directed the president Pharmaceutical Association to provide details of all delayed LCs to the committee so that they could be processed speedily.

The committee also decided to conduct a special meeting to discuss the unusual economic condition of the country.

While discussing the current status of Exim Bank, the CEO Exim Bank informed that the bank could not start its operation mainly because the notification from the Cabinet is awaited, equity worth Rs1 billion did not release and clearance from the PEPRA has not been received yet.

Mandviwalla questioned why the clearance from the PEPRA is needed and have all banks currently operating in the country acquired clearance from the PEPRA. He directed the ministry to speed up the process of notification, which is to be issued by the Cabinet, provide Rs1 billion to the bank in lieu of equity and also decided to invite the PEPRA to the next meeting to address the ambiguous issue of the required clearance.

Moreover, the committee deferred the matter relating to amendments in the Customs Act, 1969, owing to the absence of representation from the Good Forwarding Association, Rawalpindi. However, as to the matter of waiving off the outstanding dues of the Federal Excise Duty against the industrial undertakings of erstwhile FATA, the chairman of the committee directed the ministry and officials of the FBR to hold in-person meeting with the representatives of erstwhile FATA industrialists for the addressal of the issue.

The committee also discussed the matter raised by Senator Mushtaq Ahmed relating to the closure of borders for transportation at Lower Dir, Banjaur, and Ghulam Khan in North Waziristan.

Copyright Business Recorder, 2023