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

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10 months 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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It is anticipated that 150 ships would arrive at Gwadar by the year 2045, allowing the port to handle fifty percent of all imports.

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3 days ago

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In an effort to strengthen the port’s economic importance, the Federal Government has made the decision to direct fifty percent of all imports from the public sector to Gwadar Port.

By taking this action, which has the backing of the Special Investment Facilitation Council, the port’s financial situation is going to be improved.

The Cabinet will be presented with a summary of imports through Gwadar by the Ministry of Maritime Affairs, which will take place after Prime Minister Shehbaz Sharif’s recent trip to China.

When the next Cabinet Meeting takes place, Ahsan Iqbal, the Federal Minister for Planning, Development, and Special Initiatives, will examine the Chinese offer for the Karachi to Hyderabad Section of the ML-1 Project and bring it to the Cabinet.

Company preparations for the Shanghai International Import Expo, which will take place in November 2024, are being made by the Board of Investment and the Ministry of Commerce of Pakistan.

One of the most important aspects of the China-Pakistan Economic Corridor is the Gwadar port, which serves as a significant commerce route connecting China, the Middle East, Africa, and Europe. At this time, the Gwadar Port is able to accommodate two huge ships, and by the year 2045, it is anticipated that it would be able to handle up to 150 ships.

By developing the Gwadar Port, regional connectivity would be improved, employment will be created, and international investment will be attracted.

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The price of gold in Pakistan has experienced a significant surge.

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3 days ago

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Gold prices in Pakistan surged significantly on Thursday following two consecutive days of decline, with the price per tola rising by Rs2,000 to reach Rs262,100. This increase was in accordance with the downward trend in international market values.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the price of 10 grams of 24-karat gold rose by Rs1,714, reaching Rs224,708.

Conversely, the world gold market experienced an upward trajectory. According to the APGJSA, the global price of gold surged to $2,503 per ounce following a $22 gain during the trading session.

The local market experienced a significant decline in silver prices, decreasing from Rs50 to Rs2,900 per tola after a prolonged period.

The local market’s gold prices remain subject to the ever-changing dynamics of the international market, as well as domestic considerations such as currency exchange rates and domestic demand.

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The government has not met the deadline set by the International Monetary Fund (IMF) for the approval of a $7 billion loan.

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4 days ago

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On Tuesday night, there were virtual talks between representatives of the Finance Ministry and the IMF delegation, with the main topics being external finance and income generation.

According to people familiar with the situation, no date has been set for the IMF’s Executive Board to approve the loan despite the ongoing negotiations.

Officials from the Finance Ministry informed the IMF mission about the government’s initiatives to get outside funding during the discussions. Updates on loan rollovers and fresh finance commitments from allies were included in this. According to sources, the IMF has received a schedule, and loan rollovers are expected to be finished by the end of next week.

The $12 billion in debt must be rolled over before the loan can be approved by the Executive Board, according to the IMF mission.

In the virtual discussions, representatives of the Federal Board of Revenue (FBR) conversed with the IMF team over the revenue deficit. The FBR must reach its revenue goals for this month, according to the IMF mission. As a result, the IMF has asked the FBR to submit a thorough strategy outlining how it will close the gap left by the shortfall and guarantee that revenue goals are reached.

Apart from the conversations on outside funding, there are rumors that the Finance Ministry is actively holding talks with commercial banks in order to obtain new funding. According to reports, negotiations are taking place with four distinct sources for commercial loans, which are anticipated to support the government’s overall financial plan.

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that the IMF was in favor of introducing targeted subsidies. He said that qualifying recipients might receive these subsidies through the Benazir Income Support Programme (BISP).

In order to guarantee consistency, the minister announced that this week’s talks with chief ministers will focus on implementing a similar policy across the country. He was having a casual conversation in parliament with the journalists.

In response to queries about outside funding, Aurangzeb revealed a $2 billion deficit and said that talks to close this gap are progressing. He stressed how crucial it is to obtain business loans.

He went on, “At this point, there’s a need to secure an agreement for commercial loans, not exactly their issuance,” emphasizing that debt rollover negotiations are nearing their conclusion and doing well. The minister expected that these developments would shortly be reported to the governments of allied countries by relevant authorities.

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