ISLAMABAD: The outcome of stabilized policies, agriculture sector interventions, rigorous monitoring at federal and provincial levels and favourable weather will bring in better results in easing out inflation and sustain the economy towards growth and productivity in the days to come.
“Adverse effects of pre-monsoon rains on wheat crop, disruption of the supply chain of essential items due to harsh winter and thick fog, delay in harvest and arrival of crop in the market and lower production of vegetables, including tomato in Sindh, led to higher food inflation.
“However, change of weather and better supply of potatoes, tomatoes and onions should result in smooth supply and decrease price pressure,” the Finance Division said in an official statement issued on Monday.
The division noted that another factor contributing to higher inflation was the global price impact, as an increase of 43.9pc in palm oil, 12.8pc in soybean oil and 16.6pc in crude oil prices was witnessed in December 2019, as against their comparative prices in December 2018.
Downward trajectory in crude oil in the market would result in downward pattern in domestic prices in coming months, the Finance Division predicted.
“While the above factors are likely to ease inflation, the government has also taken several relief measures to protect the vulnerable from the price-hike. These measures include provision of subsidy to the Utility Stores Corporation (USC) on five essential items, for which Rs7 billion has been transferred to the Ministry of Industries and Production (MoIP); Rs141 billion already released so far for low-end consumers using less than 300 units of electricity in a month; and PM’s Ehsaas program with doubled social safety net allocation of Rs190 billion from Rs100 billion.
“Of the Rs24 billion allocated as gas subsidy, an amount of Rs12 billion has so far been released, while Rs1,000 per family have been given to 5.1 million families as a special transfer in August 2019.”
Similarly, the division stated, a Rs5,000 quarterly tranche was paid to 4.3 million poor families in December 2019. Under the Kifalat programme, it added, monthly stipends of Rs2,000 per month would be given to 4.5 million families from February 1 while a million new beneficiaries would be added to the programme in the next five months with a monthly transfer of Rs2,000.
“Other measures are 50,000 undergraduate scholarships; Rs750 for boys and Rs1,000 for girls, quarterly stipends for three million primary school-going children; record allocation of Rs152 billion for merged FATA districts; and reduced GST on LPG to 10pc from 17pc.
The finance ministry said that the government has also devised a strategy to control and ease out the impact of inflation through a host of policy measures which include the Economic Coordination Committee (ECC)’s permission to import 0.3 million tonnes of wheat; zero borrowing by the government from SBP in current FY; reduction in fiscal deficit; monetary tightening and demand compression by austerity; complete restriction on supplementary grants; price monitoring cells in the Ministry of National Food Security & Research (MoNFSR) to check price-hike of essential food items etc.
“Other measures include a network of cheap bazaars and expansion in utility store outlets; cheaper roti with a subsidy of Rs1.5 billion for public tandoors; monitoring of display of price list by the provincial governments, and measures to control cartelization and undue profiteering,” the statement concluded.
nothing to do with all the money printing they’ve done. all government revenue goes towards debt servicing and defence. everything else comes from borrowing money. since commercial banks here can’t satisfy the enormous appetite of the government the central bank has to periodically create new money and inject it into the system.