ISLAMABAD: Finance Minister Miftah Ismail Monday claimed that Pakistan would default if the government did not abolish subsidies on petroleum products.
Perhaps, Miftah Ismail is the first-ever sitting finance minister to say that the country would default.
Speaking at a post-budget conference here, the finance minister said if the price of petrol and electricity is not increased, then the country will default.
He said the International Monetary Fund (IMF) has insisted on abolishing the subsidies on petroleum products, adding that the government is still subsidizing Rs 53 per litre on high-speed diesel, Rs 19 on petrol, Rs 24 on kerosene and Rs 23 per litre on light diesel.
He said Sri Lanka also gave subsidies to its public and it, eventually, defaulted.
“Today, Sri Lanka is purchasing expensive oil and they do not have funds to buy medicines for their people,” the finance minister said as he warned of a similar situation in Pakistan.
The Finance minister also said that Pakistan will have to further rise in prices of petroleum products and a difficult situation could arise in mid-July.
In a bid to bring economic stability and revive the stalled multi-billion-dollar IMF programme, the government had increased the price of petrol by a whopping Rs60 per litre last month.
It was also expected that after the budget, some hurdles would be removed in the IMF programme’s revival. But the finance minister last week said the IMF “was still unhappy with the government over the budget” mainly because it did not implement the Personal Income Tax (PIT) measures suggested by it.
Miftah had also said last week that there was no financial emergency in Pakistan after the government took steps to rectify the ongoing economic turmoil and increased the price of petrol.
But in today’s TV interview, the finance minister said if the government does not increase the prices, the IMF will not strike a deal with Pakistan, and if this happens, then the country will be pushed toward “destruction.”
“I have told the prime minister that we have to take tough decisions. The prime minister is unhappy with increasing the prices of petroleum products. Whenever I send a summary in this regard, the ministers curse me,” Miftah lamented.
Miftah added that the PTI government did not make the decisions it agreed upon with the IMF. “We are in talks with the IMF; the PTI did not strike a good deal with it.”
He also said that Pakistan needs $42 billion in the next fiscal year and we have to pay $21 billion in debt adding that he said that if we do not settle our matters with IMF, the World Bank will hold $9.5 billion and the ADB $8 8 billion in financing.
He said that once the agreement with the IMF is reached and Chinese banks extend their loan facility to Pakistan, the market will regain confidence.
He also said that government would also include 6 million people in the Benazir income support program. we have received 4 million texts in 10 days as the government announced to give Rs2000 for petrol subsidy.
He said that the government has announced incentives for agricultural development in the budget and would also announce the export policy in a few days.
Replying to queries regarding the increase in electricity tariff, he said that Economic Coordination Committee has approved jacking up the electricity prices by Rs7.91 per unit.
The matter would be presented in cabinet meeting then we will gradually increase the prices of electricity.
Replying to media queries on the ongoing discussion on Twitter about his company, the Finance minister said that there is no tax discount for his company.
He said the Lay’s manufacturing company will get benefit as it wanted to export its product. “My company uses the candy colour but there is no reduction in the duty of candy colour”, he added. He also said that Pakistan will be out of FATF’s grey list soon.
