Tarin unveils measures to curb imports ahead of IMF talks – Journal
ISLAMABAD: Conceding concerns over the warming Pakistani economy, Finance Minister Shaukat Tarin on Wednesday announced measures – regulatory fees and cash margins – to curb imports ahead of negotiations with the International Monetary Fund (IMF) on the proposed increase in electricity tariffs to revive the $ 6 billion Extended Financing Facility (EFF) suspended since the previous fiscal year.
Speaking at a hastily called press conference with Prime Minister’s Special Assistant Jamshed Iqbal Cheema and State Information Minister Furrukh Habib, the finance minister said the government would immediately cut back on prices for vegetable ghee, sugar and wheat across the country by reducing taxes and providing cash subsidies to 40-42 percent of the population at the bottom of the ladder.
Although appearing worried about questions about his own future in government in the remaining 25 days of his constitutional term ending Oct. 15 and those challenging government quoted prices, the finance minister dismissed uncertainties about his portfolio. “I’m not going anywhere. I trust the Prime Minister who promised to make me a senator,” he said.
Says government will cut prices for ghee, sugar and wheat by cutting taxes and providing cash subsidies
Responding to a question, the minister said overall revenues improved by 45% exceeding the target of 24%, mainly due to increased imports – a phenomenon showing economic growth. Early estimates also suggest a 160% increase in cotton production so far, showing signs of increasing agriculture, in addition to large-scale manufacturing – all indicators of growth.
“However, my concern is that it does not overheat to a level that creates problems for the exchange rate and the balance of payments,” the minister said, adding that it should also be borne in mind that prices were the highest in the world for 10 years because of production and logistics issues and Pakistan could not stay away.
Therefore, he said, the government had decided to impose regulatory fees and 100% cash payments for opening letters of credit for non-essential luxury imports. He did not disclose which import items would fall under these tax measures, but said the measures were important in cooling the heating economy.
He said some quarters suggested GDP was heading above 5% growth and “we want to control it; we don’t want to go quickly to 6-7% growth, which could be problematic and unsustainable ”.
Speaking about the currency devaluation, the finance minister said pressures have built up due to increased imports as oil and LNG prices have risen dramatically in six months, auto imports, dollar outflows to Afghanistan instead of past inflows and perceptions that speculators and importers have also exploited.
However, the real effective exchange rate (REER) was almost close to the market rate with a difference of about Rs 2 per dollar.
Responding to a question, Tarin said issues with the IMF remained unchanged as the two sides agreed ahead of the budget to go on vacation and return to Q1 performance as the government pledged to meet the ‘Rs 5.8 trillion revenue target and tackle circular debt with alternative means instead of raising taxes on those already taxed and raising energy prices, which would reverse ongoing efforts to support the poor.
The minister said the government has achieved good results on revenue and the flow of circular debt has also been reduced. “Now that three months of recess was over, we would sit together for the next few days and ask them [IMF] to allow us to continue working on our orientations. There are no preconditions and prior actions. We maintain our principled position and will hold negotiations. Only time will tell how the two sides negotiate, ”he added.
Mr. Tarin said the government decided to immediately reduce the price of vegetable / oil ghee from Rs45-50 per kg to Rs290 from Rs340 and that of wheat flour to Rs55 per kg. He said the government’s decision to increase the output price of wheat to 1,950 rupees per 40 kg from 1,475 rupees had become effective and that under an agreement the flour mills would provide a 20 kg bag for 1,100 rupees.
In addition, sugar will be available nationwide at Rs 89.75 per kg to provide relief to 40-42% of the population. He said the government would provide a cash subsidy on wheat flour, sugar, ghee and pulses next month.
The minister said that the judiciary system abolished by the Musharraf government created a lot of problems and he called on the prime minister to restore this mechanism, otherwise the subsidies, tax breaks and strategic reserves of essential products would not work. desired. The Prime Minister had agreed to guarantee it in a few months, he added.
SAPM Cheema added selected figures to claim that Pakistan is the cheapest country in the world under the PTI government and argued that in dollar terms the prices of petroleum products, wheat and sugar were the cheapest. compared to the PML-N and PPP governments of the previous decade.
When challenged with actual market prices and comparable figures going on in India, Mr Tarin took it personally, saying he would not let suggestions prove him wrong with general statements and that ‘he might ask the team that prepared those numbers to compare again.
Mr Tarin said that despite the spiraling world prices, inflation had come down in Pakistan due to the balanced policies of the government. He said food inflation had also declined over the past two years. He said aggregate prices of essential food items had increased around the world as sugar prices rose 80% from $ 240 per tonne in 2018 to $ 430 and palm oil by 58%, rising from $ 240 per tonne in 2018 to $ 430. from $ 760 per ton to $ 1136, while in Pakistan the prices of cooking oil only increased by 33pc.
The minister said that despite rising prices of gasoline, diesel and other petroleum products in the international market, prices in Pakistan were very low compared to countries in the region. He said the government cut the oil tax and sales tax to relieve the masses.
In addition, he added, the government would put in place a scientific engineering process to analyze the benefits of the supply chain and administratively reduce the role of intermediaries. The government was also building up strategic reserves of pulses and onions to help rationalize prices, he said, adding that the government would build produce warehouses and cold stores so that farmers and buyers are directly linked without involving intermediaries.
The minister said that Pakistan’s Competition Commission has been tasked with taking action against cartelization of ghee makers. He said the government was working on initiatives to improve people’s income and affordability, adding that the Kamyab Pakistan program would be launched by the end of this month to uplift the lower strata of society.
Posted in Dawn, September 23, 2021