The Gilgit-Baltistan (G-B) government seems to have acted in the short-term interest of the poor, if not the long-term. The government has declined the International Monetary Fund’s (IMF) proposition to revoke wheat subsidy for the people in the region. The subsidy, if withdrawn, would more than double the rate of a 40 kg bag of wheat flour.
“The IMF wanted the government to revoke the wheat subsidy, however, it withstood the pressure largely because the people of the region are poor and cannot afford costly wheat,” a G-B government official told The Express Tribune on Saturday.
The official said that the IMF wanted the G-B government to lift the subsidy in the budget for the fiscal year 2012-13, which was presented in the G-B assembly during June, to enable the government to increase its revenue.
The official estimated that had the subsidy been revoked, the price of a 40 kg bag of wheat flour would have climbed from around Rs650 to Rs1,300.
But the government was not too strict in its refusal. G-B Finance Minister Mohammad Ali Akhtar said that despite IMF’s pressure, the government raised only Rs3,000 per metric ton on the price of wheat during the current fiscal year.
The G-B government currently provides wheat to the people at Rs11,000 per metric ton and incurs subsidy costs of Rs39,000 per metric ton on 150,000 metric ton of wheat, he added.
Akhtar said that due to the subsidy, the G-B government now owes Rs13 billion to the Pakistan Agriculture Storage and Services Corporation (PASSCO) for the period 2001 to 2012.
He said the amount has been waved off by the federal government for the G-B government and will be paid to the corporation by the federal government, not the G-B government.
Official sources said that PASSCO has been facing severe resource crunch in its food security operations due to the outstanding amount of Rs13 billion.
Subsidy on wheat was introduced in G-B by Zulfiqar Ali Bhutto during the 1970s in view of the region’s high poverty index and lack of significant agricultural land and industrial zones.
Experts say G-B is at high risk of food insecurity and may soon become the most food-insecure regions of the world.
Published in The Express Tribune, October 14th, 2012.
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