ISLAMABAD: Ahead of formal talks with the International Monetary Fund (IMF) on a $6 billion rescue package, Finance Minister Shaukat Tarin said on Wednesday the Fund had been asked to take a lenient view of the recent subsidy package that was announced to prevent people from taking to the streets.

Speaking at a news conference, Mr Tarin said the consultation had been down with the IMF before the announcement of the subsidy package “to the extent necessary”.

He was referring to a recent fuel and electricity subsidy package announced by Prime Minister Imran Khan despite a steep rise in the global oil market. Mr Khan pledged to freeze the new rates until the next budget in June.

“They (IMF) have nothing to do with politics. We have told them not to press hard. Please be gentle or the people would be on the streets,” he said.

Says recent amnesty scheme may ‘smell dirty’, but it’s not

He hoped the talks with the IMF on the 7th review would be successful as all targets for the end-December review period were on track.

He said the government was neither increasing fiscal deficit nor taking loans but using fiscal space on account of better revenues, including those not effectively captured earlier, such as dividends of state-owned entities (SOEs), a cut in the development programme, inadequate Covid-19 funds utilisation and budgeted allocations for the Ehsaas programme.

The minister explained that SOEs had not declared dividends for three to four years. The government had budgeted Rs94bn dividends from these entities, while Rs1.2 trillion worth of dividends of only oil and gas firms had been stuck up in the circular debt.

Mr Tarin did not agree that the subsidy package was meant for political purposes and contended that it was an economic package to ease the difficulties of the people. “We have tried to provide a cushion to help people of this country to cope with the super price cycle,” he said.

Responding to a question about the decision of the Financial Action Task Force (FATF) to retain Pakistan on its grey list, the minister said everybody knew the motivations as the country achieved success on 26 points and closely missed only one. “It’s all politically motivated,” he said.

Responding to another question, Mr Tarin said he was also opposed to the general tax amnesty schemes, as these were unfair to taxpayers but had only allowed “a targeted and ring-fenced” scheme for investment. He said defaulters and beneficiaries of previous such schemes would not be entitled to the new scheme recently announced by the government.

“They wanted to cover a lot in the recent scheme, but I have ring-fenced it and covered only fresh investment in machinery and equipment — not even for land for the industry,” he said. “This may smell like a dirty money whitening scheme, but this is not. It’s targeted and would produce good results.

He added that a similar package for the construction sector had attracted Rs500bn worth of fresh investment until it was closed in December.

The minister did not agree that Pakistan had sought a $21bn financial package from China during a recent visit of Prime Minister Imran Khan because the nature of engagements this time was at the highest level with Chinese President Xi Jinping and Prime Minister Li Keqiang. The four strategic areas were discussed during these meetings while the financial package could be discussed at the bilateral level.

Mr Tarin said the government was sustaining a Rs104bn burden every month only on account of petroleum rates.

He said the government had set a Rs5.8 trillion budget target for revenue collection this year and later increased it to Rs6.1tr as part of the IMF agreement.

Revenue collection could have gone up to Rs7tr had the government not given up its revenue on petroleum products, he said, adding that Rs800-900bn worth of hit was coming only on account of tax waivers on petroleum products.

Mr Tarin said Pakistan’s trade deficit and inflation were declining but had not attracted the kind of projection they deserved in view of political and international issues. He said the recent trade numbers also contained some institutional imports, otherwise the import trend had actually declined.

Cooking oil strategy

Mr Tarin while chairing a meeting of the National Price Monitoring Committee (NPMC) asked for devising a strategic plan for meeting the demand of palm oil and soyabean, APP adds.

He underlined the need for research on alternatives to minimise the dependency on imports of these commodities.

The minister directed the Balochistan authorities to ensure stability in the prices of wheat flour by maintaining the daily release of wheat to flour mills and asked the relevant authorities to analyse and estimate wheat stocks closely.

He also ordered the ministry of commerce to formulate a viable plan for determination of prices of potatoes and asked the ministry of national food security and research to expedite the process to set up a forecasting unit for major and minor crops for timely decision making.

Published in Dawn, March 10th, 2022