Interim Prime Minister Anwarul Haq Kakar on Tuesday declared the civil-military run Special Investment Facilitation Council as his top priority while also extending support to the International Monetary Fund (IMF) programme.
The interim premier took a briefing on the implementation of the $3 billion Stand-by Arrangement in his maiden meeting on the economy. He showed a resolve to implement the fund programme, according to officials privy to the meeting.
The Ministry of Finance and the State Bank of Pakistan informed the new chief executive of the country that the implementation on the IMF programme during the first month remained almost on track, they added.
The PM was given a detailed briefing on the conditions that Pakistan and the IMF agreed in return of $3 billion loan, signed in June for a period of nine months.
The PM inquired whether there was a need to further raise the petroleum levy to Rs60 per litre on petrol and high speed diesel.
However, the finance ministry advised him to retain the tax at its current level of Rs55 per litre.
Kakar gave go ahead to increase the prices of petrol and diesel with effect from Aug 16 (Wednesday), the officials said.
Under the deal, Pakistan has committed to the IMF that it would increase the maximum petroleum levy to Rs60 per litre with following the path of increases to reach an average rate over of Rs55 per litre.
The finance ministry officials were of the view that as the prices were already going up due to currency depreciation and the global prices, the levy at this stage should not be further increased.
The finance ministry had not sought any decision on the economic matters and instead gave an overview of the IMF programme and increase in prices of electricity and petroleum products.
The rupee fell by Rs3.01 against the US dollar on Tuesday during interbank trade, closing near Rs292 per dollar.
The devaluation is going to hurt the people due to its impact in the shape of increase in prices of electricity, petroleum products and imported goods.
Under the IMF deal, the gap between the interbank and the open market exchange rate should not be more than 1.25%, the PM was informed.
The sources said that Kakar emphasised upon meeting the IMF condition on increasing the health and education spending by the four provinces and the federal government.
He was of the view that instead of implementing this condition as part of the IMF deal, the authorities should increase spending in the country’s own interest.
Under the IMF condition, Pakistan is ought to spend Rs1.03 trillion on health and education -a condition that was also in the previous programme but was not met.
The PM emphasised that the government should ensure quality spending on health and education.
A meeting would soon be held with the provinces in this regard.
Kakar said that the government would ensure continuity in the economic policies, besides further improving them, the PM Office said.
An official handout by the PM Office quoted Kakar as saying that “enhancement of foreign investment under the Special Investment Facilitation Council was among the top priorities of the caretaker set-up”.
The military had advised the previous government of Shehbaz Sharif to set up the council for attracting the foreign investment from the Gulf countries.
The SIFC has already approved a list of 28 projects and also took a decision to dilute Pakistan and Barrick Gold’s shareholdings in Reko Diq project in favour of Saudi Arabia.
The PM was briefed about the IMF’s conditions with regard to the increase in electricity prices, approval of the circular debt management plan and lowering the stock of the circular debt.
The PM was told about the possible political fallout of the upcoming increase in rates of electricity on account of quarterly tariff adjustment, according to the sources.
It will be a major increase after the recent hike of over Rs8 per unit on account of annual base tariff that was done under the IMF condition.
The PM Office stated that Kakar directed for expediting ongoing reforms in the power sector and strict implementation of measures for increasing tax revenues.
Despite a massive increase in electricity prices, the circular debt jumped to Rs2.31 trillion by end of last fiscal year due to surge in line losses, theft, and under recovery of bills.
The PM was briefed that the IMF set Rs1.977 trillion tax collection target for the first quarter of this fiscal year.
The FBR achieved that tax target for the month of July. FBR Chairman Amjad Zubair Tiwana assured the PM that the FBR would try to achieve the August-September targets.
However, the reduction in imports remained a challenge in achieving the target assigned to the Pakistan Customs.
The PM sought a separate briefing from the FBR on its state of affairs.
Kakar said that the caretaker government would concentrate on deregulation and responsible autonomy for further improvement of the economy and expressed the resolve to focus energies on economic reforms during their tenure, according to the PM Office.
The meeting was briefed over the steps taken for bringing further improvement and stability in the economy.
A detailed briefing was also given over the reforms in the power sector.
The caretaker prime minister directed for submission of detailed reports regarding ongoing reforms in all sectors.
The PM was also briefed about other conditions of the IMF related to the primary budget target and ceiling on the amount of government guarantees that the IMF capped at Rs4 trillion for this fiscal year.
Under the IMF programme, the government is required to disburse Rs185.5 billion among the BISP beneficiaries.
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