Govt vows to bring prices of essential items down

KARACHI: The government has vowed to bring the prices of essential items down and expressed the hope that the need for continued subsidy will no longer be required, a spokesman for the Ministry of Finance said.

Responding to the press conference by former finance minister Miftah Ismail, he said the foreign exchange reserves have witnessed a jump to touch $23.40 billion, compared with $16.4 billion left by the previous government.

The current account deficit has been reduced from $20 billion to a surplus of around $1 billion in July-May 2021, the spokesman said, adding that the primary deficit was left at 3.8 per cent of GDP, whereas the present government succeeded in reducing it to 1.1 per cent this year and budgeted at 0.6 per cent by the end of the year amid difficult economic conditions.

After making adjustments of expenditures for Covid-19 and settling the past Independent Power Producers’ (IPPs) circular debt, this primary deficit is also budgeted to turn to positive +0.1 per cent. The spokesman said the interest rate, which was 7.5 per cent in July 2018, was brought down to 7 per cent after making necessary adjustments because of the failures of the monetary policy under the PML-N regime.

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The failure of the monetary policy has starkly reflected from the fact that during the tenure of Miftah Ismail as the finance minister, there was complete breakdown in the government’s debt market because all borrowings were totally sourced from the State Bank of Pakistan.

Consequently, the government’s borrowing from the central bank rose to over Rs5 trillion by July 2018 from Rs1.4 trillion on June 30, 2016. It is; therefore, useless to suggest that Pakistan has not done anything for the International Monetary Fund (IMF) programme, the spokesman added.

Talking about the IMF programme, the spokesman for the Ministry of Finance said the programme is intact and a new mission is expected to arrive in August to review the full-year’s economic performance.

The government firmly believes in reforms and has made significant progress since the IMF programme was launched and subsequently put on hold because of the Covid-19.

In March 2021, all missed reviews were completed and Pakistan had rendered a stellar performance under the programme, he said, adding that the tax revenues were reaching Rs4.70 trillion, compared with Rs3.86 trillion of the previous government.

Responding to the petroleum prices, he said the government was highly conscious of insulating the consumers from the vagaries of changes in international prices, particularly the petroleum prices. In the last one year, the domestic prices have increased by around 45 per cent compared with an increase of over 100 per cent in the international petroleum prices, he said, adding that all this was due to sacrificing precious non-tax revenue just to prevent the people from over-burdening.

Regarding Iranian oil, the spokesman said the possibility of lifting of sanctions on Iran would help reduce the international oil prices.

“We are finalising the agreement with Saudi Arabia for [the] supply of oil on concessional terms, which would further alleviate the need for further price adjustments.”

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