Pakistan to default if subsidies not abolished till July: finance minister
ISLAMABAD – Finance Minister Miftah Ismail stated on Monday that the country will default if the government does not repeal petroleum product subsidies.
The finance minister stated on Geo News’ “Capital Talk” that the International Monetary Fund (IMF) has pressed on the elimination of petroleum product subsidies.
Last month, the government increased the price of petrol by a stunning Rs60 per litre in order to provide economic stability and revive the stalled multi-billion-dollar IMF program.
It was also predicted that after the budget, several roadblocks in the IMF program’s reactivation would be lifted. Last week, however, the finance minister stated that the IMF “was still unhappy with the government over the budget” Specifically, it failed to execute the Personal Income Tax (PIT) reforms that it recommended.
Last week, Miftah stated there was no financial emergency in Pakistan after the government took efforts to address the country’s ongoing economic problems, including raising the price of gasoline.
However, in a recent interview, the finance minister stated that if the government does not raise prices, the IMF will not sign a deal with Pakistan, and if this occurs, Pakistan will be driven toward bankruptcy “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 said that the government continues to provide an Rs19 subsidy on petrol and an Rs53 subsidy on diesel and that Sri Lanka, too, provided subsidies to its citizens before defaulting.
“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 believes the market will restore confidence after an agreement with the IMF is reached and Chinese banks give loan facilities to Pakistan.