Finance Minister Miftah Ismail has said that if the government does not abolish subsidies on petroleum products, the country will default.

Talking to a local news channel on Monday night, the finance minister said the International Monetary Fund (IMF) has insisted on abolishing the subsidies on petroleum products.

In a bid to bring economic stability and revive the stalled multi-billion-dollar IMF programme, the government had increased the price of petrol by a whopping Rs60 per litre last month.

It was also expected that after the budget, some hurdles would be removed in the IMF programme’s revival. But the finance minister last week said the IMF “was still unhappy with the government over the budget” mainly because it did not implement the Personal Income Tax (PIT) measures suggested by it.

Miftah had also said last week that there was no financial emergency in Pakistan after the government took steps to rectify the ongoing economic turmoil and increased the price of petrol.

But in today’s interview, the finance minister said if the government did not increase the prices, the IMF would not strike a deal with Pakistan, and if this happened, the country would plunge into “destruction.”

“I have told the prime minister that we have to take tough decisions. The prime minister is unhappy with increasing the prices of petroleum products. Whenever I send a summary in this regard, the ministers curse me,” Miftah lamented.

The finance minister claimed that the government was still giving Rs19 subsidy on petrol and Rs53 subsidy on diesel, adding that Sri Lanka also gave subsidies to its public and it, eventually, defaulted. 

“Today, Sri Lanka is purchasing expensive oil and they do not have funds to buy medicines for their people,” the finance minister said as he warned of a similar situation in Pakistan.

Miftah added that the PTI government did not make the decisions it agreed upon with the IMF. “We are in talks with the IMF; the PTI did not strike a good deal with it.”

He said that once the agreement with the IMF is reached and Chinese banks extend their loan facility to Pakistan, the market will regain confidence. 

POWER TARIFF RAISED: Meanwhile,The National Electric Power Regulatory Authority (NEPRA) increased power tariff by Rs3.99 per unit on account of fuel charges adjustment (FCA) for April 2022 amid worsening power outages across the country.

According to a notification, the FCA for April 2022 will be charged with the bill of June 2022, which will be paid by all consumer categories of all 10 distribution companies, except for lifeline and K-Electric consumers.

The Rs3.99 increase will put a burden of around Rs58.5 billion on consumers, including GST.

“XWDISCOs shall reflect the fuel charges adjustment in respect of April 2022 in the billing month of June 2022,” the notification read.

It may be recalled that earlier this month, the regulatory body had raised the basic power tariff by Rs7.9078/kWh for the next fiscal year increasing the burden of inflation on the people of Pakistan.

The decision had been taken in line with the International Monetary Fund’s (IMF) demands and the power distribution companies’ requests. Currently, the basic power tariff is Rs16.91 per unit and with an increase of Rs7.9078 per unit, it will be more than Rs24 per unit.

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