In view of the increase in international oil prices while Pakistan is giving a Rs10 relief on petrol price the Finance Minister Shaukat Tarin said that we have made fiscal space for the relief package and will sustain it as promised.
The finance minister in an interview to ARY News said we are not in violation of any agreement with the IMF. He said that the IMF is mainly concerned about the fiscal deficit and debt to GDP ratio. We are not in violation of IMF terms and conditions.
Tarin said “ We are taking no additional loan or increasing our fiscal deficit to provide a relief package, funds have been taken from different programs. The reduction in electricity price will not impact the circular debt in any way. He stressed that the package will cost Rs250-300 billion and the numbers have been shared with the IMF”.
According to the finance minister “The relief package has been provided after working out all the numbers, the government is using some funds from development programs and other dividends are also available to it. In addition funds have also been made available from the Covid and Ehsaas program”.
Tarin added that even if the oil price increases above $100 per barrel, we have calculated our numbers and will not increase the petrol and electricity price till June 30, 2022. The government has funds available to withstand the relief package.
In a question to raise the salaries of government and private sector employees the finance minister said that we have asked the private sector companies to increase the salaries of their employees. In addition we are increasing the minimum wage requirement and introducing internship programs for the graduates.
As per the finance minister the relief package will help in reducing inflation. Inflation is on a downhill and will further reduce in the coming six to eight months.
In the aftermath of Ukraine-Russia conflict the west has imposed certain sanctions on Russia such as blocking the Swift banking system. On this Tarin said that an alternate banking system should be in place and China is trying to develop one, although it will take time.
The finance minister said Pakistan plans to import 2-3 million tons of wheat from Russia. In past Pakistan imported from Ukraine and Russia, now due to the pending sanctions over Russia we will have to import wheat on a premium from somewhere else.
In addition the EU is importing gas from Russia and Qatar. In view of any sanctions on Russia pressure will build on Qatar for gas supply as the demand increases. As Pakistan is also importing gas from Qatar it will need to look at alternate sources for importing gas.
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