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ISLAMABAD – Finance Minister Shaukat Tarin on Wednesday ruled out any decline in the price hike trend for the next three months due to the increase in prices of oil and food commodities in international market.
Addressing a press conference here, the finance minister said that Pakistan has requested the International Monetary Fund (IMF) to postpone its executive board for the second time as the government has not passed the State Bank of Pakistan (Amendment) Bill, 2021 from the Senate yet.
He informed that Senate would approve the SBP (Amendment) Bill in next few days. The IMF’s board would now meet on February 2 instead of January 28. Earlier, the meeting, which was first scheduled to be held on January 12, was also postponed on Pakistan’s request.
Tarin hinted that prices in international market would not come down in next two to three months. He admitted that salaried class and urban lower to middle class are suffering because of the price hike. The government is working on a plan to improve the salaries/incomes of the middle class in next few days. He did not share the plan but said that the government’s tax collection is more than the target so we have to be very innovative by using increase in collection in such a way that it should increase the incomes of the people and should not impact the government’s budget. He said that the government had already announced incentives for the lower segment of the society including Ehsaas Rashan Programme, Kamyab Pakistan Programme and health card, he explained. Under the Ehsaas Rashan programme, the government would provide three essential items such as ghee, pulses and wheat flour at subsidized rates to twenty million households.
Shaukat Tarin said that Pakistan’s GDP has recorded at 5.37 percent during the previous year as against initial estimates of 3.94 percent, which was not expected by anyone. He said that economy is growing and it is expected to touch five percent during the current fiscal year due to higher tax collection, electricity utilization enhanced by 13 percent and bumper crops. He said that Pakistan’s monthly exports have enhanced to $3 billion from $2 billion. He was optimistic that exports of goods would touch $31 billion level and Information Technology (IT) exports at $3.5 billion during the current fiscal year. Foreign remittances had increased by $15.6 billion in first six months (July to December) of the ongoing financial year. He informed that machinery imports have also increased.
The finance minister said that federal government has not borrowed from the State Bank of Pakistan since 2019. However, it has paid back to the central bank. He added that tax collection is showing 32 to 33 percent growth.
Tarin said commodity prices in the international market coupled with the turmoil in Afghanistan have all added to pressure on the economy. “The prices of some commodities including oil, coal, steel, edible oil and pulses have increased by 85-90%. “In January 2021, oil prices stood at $42 per barrel and are now around $87. Similarly, edible oil is currently trading at $1,300 per ton from $500-600 per ton. “This has resulted in inflation and has widened the trade deficit. However, our exports have also increased by 25-29%, alongside remittances, which has brought some relief.” Despite increase in trade deficit, there was no pressure on foreign exchange reserves of the country.
Talking about the Afghanistan crisis, Tarin said that they have told the Taliban authorities, who are facing a shortage of funds after the country’s assets were frozen, to conduct trade with Pakistan in rupees. There was lot of pressure on local currency of Pakistan as Afghanistan was trading in dollars. We may trade in barter system with Afghanistan. “Afghanistan’s dependency has caused the dollar shortfall in Pakistan,” he said. “The government has offered Taliban to trade in the Pakistani currency.” This step will ease the pressure on the local currency.
The government suffered from the four big crises in four years, current account deficit, pandemic, commodity price management, and Afghanistan’s dependency, he added. “When the Pakistan Tehreek-e-Insaf (PTI) came to power, Pakistan was facing a current account deficit, which pushed the government to seek help from the IMF. We were given a tough programme to follow,” said Tarin.
The finance minister said that entire world is following Prime Minister Imran Khan’s model of smart lockdown to deal with Covid-19 instead of complete lockdown.