Adviser to Prime Minister on Finance and Revenue Shaukat Tarin on Monday said Pakistan had already agreed with the International Monetary Fund (IMF) to increase the price of electricity.
Speaking at a press conference after receiving a confirmation from the IMF regarding the staff-level agreement, the PM’s aide said that it was an “uphill task to back out from the programme after the receipt of $500 million from the Fund.”
At the press conference, he was flanked by Federal Minister for Energy Hammad Azhar.
“Negotiations with the IMF have ended successfully,” he said, adding that the IMF has called for tax reforms to continue.
“The Asia Development Bank (ADB) and the World Bank will also provide us with funds,” he maintained.
Tarin stated that the Fund has directed Pakistan to improve the tax system, stabilise spending, and fiscal discipline in order to continue the provision of tax reforms.
“Further improvement is needed in the tax reforms,” Tarin said, citing the conditions of the Fund.
The adviser further added that the transparency of the state-owned enterprise needs to be enhanced.
On SBP’s autonomy
Shedding light on the IMF’s condition regarding the autonomy of the State Bank of Pakistan (SBP), the PM’s aide said that reforms have been introduced to clarify the duties of the central bank.
“We have to amend the SBP Act,” Tarin said, adding that Pakistan had already agreed to the condition regarding the autonomy of the SBP when they had imposed the condition earlier in March.
“Hence, it was important for us to give autonomy to the State Bank. I had said earlier as well that increase in tariff is not the solution,” Tarin said, adding that if prices are raised the pressure on the poor will increase.
More IMF conditions
Mentioning the details of the prolonged talks with the global lender, he said that during the negotiations, the delegation from Pakistan tried to save some of the sectors, including agriculture.
He, however, added that there is still room for improvement in tax laws and ease of doing business.
The PM’s aide also mentioned that the IMF had asked Pakistan to increase the petroleum levy to Rs10 billion, “which we will not be able to do so.”
“Moreover, they have asked us to impose tax worth Rs700 billion,” he added.
Basic electricity prices to increase: Azhar
Congratulating the adviser on the successful conclusion of the IMF talks, Hammad Azhar mentioned that the basic electricity prices will be increased in the coming months.
“These are difficult times and people around the world are facing problems due to COVID-19,” he said, adding that inflation around the world is at its 30-year high level.
Endorsing his views, Tarin stated that the international financial institutions appreciated Pakistan’s economic growth during the pandemic.
The adviser was of the view that the monetary policy should be free.
“Petroleum development levy should be increased by Rs4 per litre every month, he said, adding that the government aims to take the petroleum development levy up to Rs30.
He further mentioned that the IMF acknowledged the tremendous work done in the energy sector.