Petrol, gas, electricity subsidy to end: Tarin

KARACHI - Advisor to Prime Minister on Finance Shaukat Tarin on Sunday said that Pakistans nine-point agenda besides IMF efforts would help steer the country out of crisis, adding that IMF had gone through many changes and now it was just monitoring and not directing our programmes.
Speaking at the one-day conference on Economy of Pakistan and the Role of IMF at Institute of Business Administration, he said: To stabilise economic growth, we have devised this plan though we had been criticised not to cut rates as the world is doing, yet it is necessary and we are determined to generate much revenue, which is a core issue, to sustain the economic growth. There is a need to attain self-reliance in the economic field.
He highlighted the agenda points that include effective safety network, productive side of national economy, manufacturing sector, human resources, integrated energy, capital marketing, and administrative functions.
Talking about the productive side of Pakistans economy, he said that 66 per cent people of the country were linked with agriculture but they had taken this sector for granted for the last 30 to 40 years and it had not become a business. We have to spend on agriculture, starting with research and development and to work on water resources, seed production, infrastructure and establishing ware-houses on emergency basis besides producing world class crops, he added.
On manufacturing sector, Tarin said that it had been fragmented as the industry was overburdened with taxes, unnecessary tariffs, and bad marketing, therefore, they had decided to invigorate this aspect of their economy because they compete with the world on prices.
To exploit human resources in a positive way is another point we need to address and for that matter we have decided to spend more on it and gradually raise it up to 4 to 5 per cent of GDP, he added.
He maintained that integrated energy plan is our most heeded agenda point; we have 80 tcfs and we use only 2 out of them. He said that they had decided to make use of 3rd largest coal reservoirs, which is 180 billion tonnes, at Thar for power generation besides hydro and wind power projects.
The other thing is to build our infrastructure which is not possible without public-private partnership because the government could then spend much on softer projects such as health and education rather than building infrastructure all the time, he said. He pointed out that Pakistan Steel Mills, Pakistan Railways, and Pakistan International Airlines were not contributing to the economy but cost the government and it touches plus Rs200 billion which was unbearable in such a bad economic phase.
Tarin said: We need to develop capital markets, and banks have to contribute for that, adding that administrative function is a big challenge as we have no program capability and motivation, thus it is necessary to stand on our feet despite making appeals for money which is disgusting.
He stressed that they had to clean out the system at Federal Board of Revenue (FBR) as the tax payers were harassed by the authorities concerned there. To widen the tax net is our key target, rather than making the tax-payer feel feared about audits, therefore, we have changed the FBR chairman, asking all concerned to facilitate the tax payer. Our major issue is revenue, as out of 22 million household, we have only 3.4 million NTN holders which are not appreciable, he added.
Tax GDP ratio has declined in the last ten years and no government did any good job in the last 60 years, so we have to take in the upcoming budget some steps related to health and social sector because spending just 2 percent on such vital sectors is not enough, the advisor said.
Tarin said that to bring down inflation to a single digit was one major concern of the current government besides dealing with IDPS and war issues, and the government had done well but still there are challenges.
He said through realistic supportive wheat prices, the chances of wheat smuggling were minimised, adding that it is only the middleman who gets all the benefits in selling wheat from the peasant to flour mills, but now we have started treating agriculture sector properly.
To a question, he said that the government was now looking for variable tariff with equalisation in behind, adding that through uniform tariff compulsion we have to pay Rs262 billion in terms of subsidies.
Chief Economist RBS Sakib Sherani, Economic Advisor SBP Riaz Riazuddin, Managing Director KSE Adnan Afridi, Saim Ali of Standard Chartered Bank, and senior faculty members Qazi Masood and Dr Farukh Sajjad spoke on the occasion on different topic such as Fiscal Policy, Monetary Policy, Exchange Rate Policy, Trade Policy, and Capital markets.
At the end of the conference, the souvenirs were distributed among the speakers, and the dean and director of IBA, Dr Ishrat Hussain, gave vote of thanks.
Agencies add: Shaukat Tarin said the government has decided to withdraw subsidy from petroleum, gas and electricity ahead of 30 days under an agreement reached with the IMF.
IMF had to be approached due to deteriorating economic situation but now the economy was depicting rosy picture, he remarked while addressing the conference.
Tarin said that a decision for putting an end to the subsidy on petrol, gas and electricity has been taken.
He said that the current fiscal year revenue recoveries would amount to Rs1180 billion, but yet the recoveries have been crucial problem for the government.
He said that relief would be given to the middle class in the upcoming budget.
Talking to newsmen after the conference, Tarin said the Federal Budget for the fiscal year 2009-10 would be presented on June 13.
The Adviser said the focus for the next year would be to revive the economy after stabilization. He stated that attention would also be on the creation of the employment opportunities.