The Monetary and Fiscal Policies Coordination Board has agreed to reduce electricity subsidies by Rs170 billion and also discussed the possibility of scaling back grants for subjects that fall in provincial domains.
The meeting was held under the chairmanship of the Minister for Finance & Revenue Shaukat Tarin in the federal capital on Wednesday. Other members of the board present in the meeting were the Adviser to the PM on Commerce & Investment Abdul Razak Dawood, Deputy Chairman Planning Commission (PC) Dr Jehanzaib Khan and Private Member Dr Asad Zaman.
According to The Express Tribune, the board reviewed the recommendation of completely withdrawing electricity subsidies for consumers of 201 to 300 units. The proposal was to reduce electricity subsidies from Rs240 billion to Rs120 billion by reducing subsidies from 300 units consumption level to 200 units.
It also took up another proposal of reducing the federal electricity subsidy on agriculture-tube wells from Rs75 billion to around Rs25 billion to Rs30 billion either through reducing motor size up to 15-20 horse power or asking the provinces to share 50 per cent of the cost.
There was a consensus in the meeting that the subsidies for the agriculture tube-wells and domestic consumers have to be rationalised. The matter will now be taken up with Prime Minister Imran Khan.
Furthermore, the country’s economic managers noted rising international commodity prices, higher import bill and current account deficit (CAD) as key risks to macroeconomic outlook and decided to have closer coordination and vigilance for policy adjustments to support higher growth.
An official said CAD is anticipated to go up as imports rise with higher international commodity prices.
The finance minister briefed the board on the current economic situation of the country and highlighted the major incentives given in the budget due to which business confidence is improving and economy is moving on strong economic recovery path.
He said all key economic indicators relating to real sector of the economy, fiscal sector, monetary and external sectors were going well and the government was proactively executing all policy measures to achieve the major socio-economic targets of the current fiscal year.
The minister “also highlighted the possible risks to the economic activities and strategy to counter these risks which were appreciated by the members of the board”, an official statement said.
Urging the Board to be more proactive in reviewing the impact of fiscal and monetary policies on economic growth, employment and the external sector of the economy, Tarin directed for designing and executing policies to achieve economic targets and overcome the possible risks and advised the forum to take more effective steps for maintaining better coordination of policies to achieve the planned macroeconomic goals.
Secretary Finance briefed the members of the Board on budgetary allocations for various activities and informed about the ways and means to maintain the fiscal discipline.
He also shared the strategy to contain the non-development expenditure with the focus to optimally utilise resources of the country and improve the service delivery at large for the common man.
Deputy Chairman Planning Commission apprised the meeting about the execution of development activities and highlighted possible options for resource mobilisation and how to utilise them effectively for development of potential sectors of the economy.
Adviser to the PM on Commerce & Investment, Abdul Razak Dawood, briefed about the structure of trade of the country along with major destinations.
He presented various measures currently under execution to enhance exports in potential areas. He also mentioned the various categories of imports which can be rationalised by focusing on their substitutes.
A comprehensive road map was also discussed to minimize the trade deficit of the country. It was also highlighted that fiscal and monetary facilitation will continue for potential sectors of the economy.
Moreover, Economic Advisory Committee (EAC) and SBP Monetary Policy Committee member Dr Asad Zaman highlighted the potential areas where Pakistan has comparative advantages in the export market and also identified some low hanging fruits for import substitution.
He emphasised that the goal of well-coordinated monetary and fiscal policies is to achieve full employment.
