KARACHI: Former finance minister Shaukat Tarin said on Thursday the country is heading towards default, which may compromise its strategic interests.

Speaking to reporters at the Karachi Press Club, the PTI senator said the Sensitive Price Index — which measures the average change in the prices of most essential goods — is likely to hit 35-40 per cent “within the next few weeks”. His prediction for headline inflation, which measures the change in the prices of a bigger basket of consumer goods, was 25-30pc for the coming months.

“They’re crushing the middle class. They’re rolling back welfare schemes like Sehat Cards and Kamyab Jawan programme. They’re headmasters of the University of the Incompetent,” he said.

Mr Tarin dedicated a large part of his press briefing to the energy crisis that’s causing up to eight hours of loadshedding in urban centres and 12 hours of outages in rural areas.

Contrary to the claims of the coalition government, he insisted there was zero generation shortfall on April 30. However, the “imported government” failed to account for rising power demand and didn’t order fuel on time, he said. As a result, nationwide loadshedding reached 7,500-8,000 megawatts in June with a generation shortfall of 5,277MW.

“If we were in government, we’d arrange the funds and avoid loadshedding at all costs. But their thinking is to save money by simply not purchasing fuel. They don’t care about the people suffering endless hours of loadshedding.”

He said textile exports in July will drop by $1 billion. Small and medium-size enterprises will suffer even more once the latest hike takes the benchmark interest rate to the 13-year high of 15pc. “Textiles, autos and mobile manufacturing are bearing the brunt of the government’s incompetence,” he said.

Mr Tarin held capacity payments — money the government pays to electricity producers regardless of their actual output — partly responsible for the poor cash flow management in the power sector. These payments will rise to Rs1.4 trillion this year, even though large chunks of the installed capacity will remain idle because of expensive fuel that must be imported to run these plants.

He said the government is borrowing from banks at interest rates that’re 1.5-2pc higher than the benchmark, which is increasing the overall cost of credit in the economy.

He accused the government of looking the other way while speculators in the currency market — namely banks, exchange companies and exporters — play havoc with the exchange rate.

Responding to a question, the former finance minister said he didn’t collect the petroleum levy on an incremental basis despite committing to it with the International Monetary Fund (IMF). “The IMF’s concern was revenue collection, which we did without the levy,” he said, noting that its imposition to the tune of Rs50 per litre by the coalition government will “break the back of the nation”.

If the PTI was in power, Mr Tarin said, his first move to arrest the galloping inflation would be to procure Russian oil or even finished products at cheaper rates. Insisting that Cnergyico and Attock refineries are capable of processing Russian crude, he said cargoes can always be swapped with other players in the global energy market.

He said his government would’ve extended a petrol subsidy for motorcycle users and tried to broaden the tax base to pay for it.

Published in Dawn, July 8th, 2022