Minister alerts on more gas rates raise to meet IMF terms

ISLAMABAD  -  Caretaker Finance Minister Shamshad Akhtar on Thursday hinted for further increasing gas prices from January next year to fulfil the conditions of the International Monetary Fund (IMF) before the next review under the $3 billion Stand-By Arrangement.

Talking to media here, the finance minister said that the country might need another IMF’s programme after completing the ongoing programme next year. “We need to continue with the IMF as our economy is still fragile and we will possibly seek another loan”. 

She said that Pakistan and the IMF have reached a staff level agreement on Wednesday, which is subject to the approval of the Fund’s executive board in the next few weeks. Upon approval around $700 million will become available bringing total disbursements under the program to almost $1.9 billion. The IMF had approved a nine-month stand-by arrangement (SBA) for Pakistan worth $3 billion in July this year. 

Shamshad Akhtar said that the government has not decided about new taxation measures as it is focusing on tax collection target of Rs9.4 trillion. She further said that the government would issue the bond worth of $1.5 billion in the international market after Pakistan’s ranking improves, which is likely after successful IMF’s review. She informed that Pakistan would not face external financing issues, as it is expecting to receive funds from the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank and Islamic Bank during the current fiscal year. The Finance Minister claimed that the country’s economic situation has improved. However, there is need for further improvement. She said that inflation has also stated to decline.

She explained that the interim government had introduced several reforms under SBA, which had also revived economic activities in the country. Reforms under SBA were supported by the international partners. She informed that the caretaker government has implemented the annual budget in letter and spirit. The energy prices were adjusted. The government has reduced the pressure on external and fiscal sectors by improving the foreign exchange market mechanism. Shamshad Akhtar has warned that Pakistan is facing significant external risks, which include geo-political tensions, increasing commodity prices and tough global conditions. To achieve macroeconomic sustainability and balanced growth, she said, the caretaker government would continue its efforts. 

The Finance Minister outlined the eight priorities of the interim government. First priority of the government is to reduce the public debt through fiscal consolidation and to continue with development priorities. To achieve fiscal discipline at federal and provincial levels, we should improve the tax collection and control the expenditures. The government is working on capacity building for broadening of tax base and revenue mobilization. The second priority of the government is improving the social safety net to help the poor segment of the society. 

The Finance Minister informed that the caretaker government has agreed under the SBA with the IMF for reducing costs in the energy sector. Circular debt in power and gas sectors had increased to four percent of the GDP. The interim government has started working to reduce the circular debt in the energy sector, as electricity and gas tariffs were adjusted. The government is also working to reduce the losses and theft in the energy sector, she added.

She said that the interim government would continue to follow the market-determined exchange rate policy and to build the country’s foreign exchange reserves. The Finance Minister said that proactive monetary policy is also one priority of the interim government to bring the inflation rate under the targeted level. She said that the government would bring resilience in the financial sector and continued vigilance in the banking sector. 

The Finance Minister vowed to continue reforms in state-owned entities, which would help in improving business activities. It would help in increasing investment and creating job opportunities. The government is working to bring SOE policy, which would include privatization of selected state-owned entities.

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