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Wednesday, April 17, 2024

Abolishing petroleum subsidy to avoid default, Miftah

Miftah said that abolishing petroleum subsidy till July is necessary to make an agreement with the IMF and save the country from default

Today, fuel expense is taking a major portion of incomes which is expected to grow even bigger in near future. Adding to this, Miftah Ismail has revealed that Pakistan is at the risk of ‘default’ and abolishing petroleum subsidy till July is the only option left. A textbook solution for such a challenge is clearly to increase the prices which means that the consumers are going to bear even more financial burden. This is an alarming revelation and a warning for the default which has already occurred in Sri Lanka.

Read more: Miftah Ismail says petroleum prices to increase further

During an interview, the finance minister stated that the International Monetary Fund (IMF) has demanded to abolish the subsidies on petroleum products.

During last month, in an attempt to bring economic stability and restore the stalled multi-billion-dollar IMF program, the authorities had increased the price of petrol by Rs. 60 per liter. The government had expected that after the budget, some of the obstacles would be removed in the revival of IMF’s program.

Unfortunately, it did not happen. Miftah Ismail said “the IMF was still unsatisfied with the government over the budget” primarily because it did not impose the personal income tax as recommended by the IMF.

Read more: Govt increases petrol price to Rs209.86 per litre

He emphasized that there is a dire need of getting into deal with the IMF and increasing prices is a prerequisite. In case the country fails to attain, it will be pushed towards “destruction.”

Moreover, he claimed that despite the price hikes, government was still giving subsidy of Rs. 19 on petrol and Rs. 53 on diesel. Same scenario was created in Sri Lanka and it eventually defaulted.

He added “Now, Sri Lanka is buying expensive oil and they lack funds to purchase medicines for their people.” Miftah criticized the PTI government for not complying with the decisions it reached with the IMF previously.

Although strict measures have been taken and some more are foreseen but once the deal with the IMF is finalized and loan facility is extended to Pakistan by the Chinese banks, the market will revive.