Prime Minister Yousaf Raza Gilani has said that despite rising energy costs, the government has managed to contain the current account deficit at 1.7 per cent of total national income, which has kept the currency stable.
Speaking at the Command and Staff College Quetta on Monday, Gilani referred to record exports of $24 billion, despite economic slowdown and energy shortages. “This is the highest-ever export figure and is a major achievement,” he said.
Gilani said there was a strong connection between socio-economic factors and the security situation, adding that the global increase in oil and food prices had affected Pakistan as well.
According to him, Pakistan had to approach the International Monetary Fund (IMF) for loans due to economic difficulties. However, one major conditionality for these loans was that energy prices which were on hold for many years, should be increased for recovering the actual generation cost.
Similarly, budget deficit caps were introduced which further curtailed the government’s ability to subsidise some items to protect the common man from inflation, he added.
He dismissed the impression that the energy shortage was an outcome of the gap between demand and supply, adding there was an installed capacity of 19,000 megawatts, including thermal, hydel and gas-based electricity.
The government was contributing, although unwillingly, to finance cost differentials through borrowing from the State Bank, since tax revenues were not enough, he added.
Published in The Express Tribune, June 7th, 2011.