Finance minister says IMF program is non-negotiable as caretaker govt has inherited it from previous govt n Warns dollar value could further increase if govt stops implementing IMF programme.
ISLAMABAD - Caretaker Finance Minister Shamshad Akhtar on Wednesday made it clear that the government does not have any fiscal space to provide subsidies to the masses as the country’s economic situation is worse than anticipated.
The minister said that every conceivable effort had been directed towards undermining the economy. “Unfortunately, no effort has been spared to destroy the economy,” she remarked during the Senate Standing Committee on Finance and Revenue and talking to the media later here. She further said that the caretaker government had “inherited” the International Monetary Fund (IMF) programme; hence, it was “non-negotiable”.
The finance minister’s statement comes as Pakistan remains plagued by the inflated cost of living, particularly exorbitant electricity prices that have forced residents to take to the streets across the country. So far, the caretaker government has failed to come up with any relief measures as it tries to strike a balance between avoiding drawing the IMF’s ire and causing more citizens to blow a fuse. Talking about the ongoing currency depreciation, the minister informed that this was due to the higher outflows of dollars against the low inflows. She explained that Pakistan’s 70 percent tax revenue is being spent only on debt servicing. Earlier, the Senate Standing Committee on Finance in its meeting expressed concerns over the continuous currency depreciation against the US dollar. Pakistan rupee continues shattering records as it reached a new low against the US dollar during early trading on Wednesday, with the official exchange climbing to Rs304. She warned that dollar value could further increase and the economic situation would worsen if the government stops implementing the IMF’s programme. Shamshad Akhtar informed the parliamentary committee that there is a need to privatize the loss-making public sector entities at the earliest as their losses are unbearable. “The next elected government would have to re-engage with independent power producers,” Akhtar stated and added that the country’s tax collection is much lower than the expenditures. She clarified that the interim government does not have unlimited powers. “We have limited options and will work within them”. The previous government had agreed on “adjustments” with the IMF and the incumbent set-up could not do anything in this regard. She said that the proposal to withdraw facilities for the privileged class was under consideration and a briefing would be given to the committee on the economy after a week. She said that the government is aware of the plight of the country’s poor population and that further burdening the underprivileged segment of society is not an option. She pointed out that the subsidies included in the IMF agreements were already established by previous governments, and there is no room for further subsidies in these agreements. The minister went on to say that the government is planning for economic stability and is working on practical measures to improve the economy. She stated that actions were being taken to strengthen the economy in such a way that the exchange rate of the Pakistani rupee remains stable against the US dollar, as part of efforts to bolster economic stability.