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Minister warns of further hike in electricity, gas tariffs in Jan

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1 year ago

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  • Finance minister says urgent action needed to curtail circular debt.
  • Islamabad hopeful of unlocking forex inflows after IMF review.
  • Says IMF to grant approval for second tranche within a month.

ISLAMABAD: It seems there will be no respite for the masses from high electricity and gas tariffs as interim Finance Minister Dr Shamshad Akhtar has said that the caretaker government plans to hike the prices of these utilities in January to curtail the circular debt issue, reported The News on Friday.

Addressing a press conference at the Q Block on Thursday, the federal minister said that under the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA) the government has agreed to cut down the costs in the energy sector and restore efficiency.

“The circular debt of the power and gas sectors has crossed 4% of Gross Domestic Product. Urgent action is needed to bring it down. We have started work in this regard and electricity and gas rates have been adjusted accordingly,” she added.

Sharing more details about her talks with IMF, the finance minister said that she had informed the global lender about tariff revisions in the energy sector and the intention to impose extra taxes on various sectors, including real estate and retailers. However, she clarified that no final decision has been taken as of yet.

“Pakistan requires a fresh short-term IMF programme as the country cannot run without it keeping in view of the fragile macroeconomic stability,” Dr Akhtar said. She added that Islamabad would have to go for another medium-term programme probably under Extended Fund Facility (EFF) once the SBA ends.

On the question of the external financing gap, Finance Secretary Imdad Bosal was hopeful that the successful IMF review would unlock programme and project loans from multilateral lenders, including the World Bank (WB), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), and Islamic Development Bank (IsDB). He hoped that a reduction in the current account deficit would scale down the external financing requirement.

“There is no gap on the external financing front as processing of the programme loans from WB and ADB as well as co-financing from AIIB were at advanced stages and would now be approved in December this year,” he added.

The secretary added Islamabad was expecting Pakistan’s ratings to improve after the review which would help the government generate the desired dollar inflows in the shape of foreign loans.

The finance minister said the World Bank was expected to disburse $2 billion in loans during the current fiscal year. The foreign exchange reserves, she said, would build up next month after approval for $700 million tranche from the IMF, so the total disbursement would go up to $1.9 billion out of $3 billion under the SBA.

Dr Akhtar said the IMF’s Executive Board is expected to grant approval for the second tranche within a month.

‘Caretaker govt building market confidence’

Meanwhile, speaking at The Future Summit in Karachi, Dr Shamshad Akhtar said the caretaker government has taken a lot of proactive measures to stabilise the economy and build market confidence.

At the core of the government stabilisation efforts is the $3 billion SBA programme approved which led to an initial disbursement of $1.2 billion by the IMF, she added.

While talking about the Special Investment Facilitation Council (SIFC), the finance czar said a transaction pipeline has been established to accelerate investments in critical infrastructure, encompassing projects such as the $10 billion Saudi Aramco Refinery.

“The transaction pipeline also incorporates leasing of 85,000 acres of agricultural corporate farms to potential foreign investors,” she added.

About structural weaknesses of state owned enterprises (SOEs) and reducing the drain on the budget, she said the caretaker government is focused on activating the Centralised Monitoring Unit (CMU), which will monitor the SOEs and publish regular reports on financial performance and contingent liabilities.

“We are in the process of finalising a SOE policy under the SOE law as agreed with the IMF. The focus of policy is on improving governance and financial efficiency of loss-making SOEs,” she said.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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