Hours after presenting the budget for the fiscal year 2022-23, Finance Minister Miftah Ismail once again indicated a hike in petroleum prices and said the government would end subsidies on fuel soon,
Last month the government increased petroleum prices by Rs60 and a day earlier presented the “toughest” federal budget for the fiscal year 2022-23 with an outlay of Rs9.5 trillion with the hope the $6 billion International Monetary Fund (IMF) loan programme, stalled since months over policy breaches, is revived.
Speaking last night on Geo News programme “Aaj Shahzeb Khanzada Kay Saath“, Finance Minister Miftah Ismail termed the budget “comprehensive” in light of the current economic situation and indicated a further hike in petroleum prices.
Ismail said no subsidy will be given in the new fiscal year — starting from July — rather, positive taxation will be imposed on petroleum products.
“We don’t want to take the country on the path to bankruptcy like Srilanka. Therefore, tough decisions are needed to be taken if you want to move the country towards prosperity,” he added.
The finance minister said as of now the incumbent government has not imposed any tax on petroleum products as “we are still giving subsidies on petrol and diesel.”
“We are still selling petrol at a loss and due to the huge deficit, the country is seeking financial packages and help every day. Therefore, to overcome the challenge we will have to take measures even if it means imposing taxes,” he said.
Ismail further stated that they were also hopeful that petroleum prices in the international market would fall and “we will increase the levy, otherwise it will be difficult for us to achieve the target”.
The finance minister said that the previous government had allocated Rs30 in terms of levy and 17% sales tax for FY22 and the government has the option of both a levy and a sales tax and “will see which to impose”.
Rejecting the possibility of handling the economic crisis without the help of the IMF, he said: “We don’t have any option left except for dealing with the IMF as the country has to pay a huge sum in terms of debt next year. If the government leaves the IMF programme then Pakistan will be a helpless country and [will likely] default.”
“However, we will not let this happen, we will negotiate with the IMF soon,” he vowed.
Speaking about a projected target of 11.5% inflation in the budget for FY 23, the finance minister went on to say that following a price hike in the international market, petrol prices in Pakistan will also increase and no doubt it will increase the rate of inflation in the country too.
“For now, I think the monetary policy is moving towards contraction as an effort to increase the interest rate by State Bank of Pakistan (SBP) and it will help in controlling inflation,” he added.