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Tuesday August 16, 2022

Miftah says Pakistan to default if subsidies not abolished

“I have told the prime minister that we have to take tough decisions," Miftah says regarding abolishing subsidies on petroleum products

By Web Desk
June 13, 2022
Finance Minister Miftah Ismail addressing a press conference in Islamabad, on May 26, 2022. — APP
Finance Minister Miftah Ismail addressing a press conference in Islamabad, on May 26, 2022. — APP

ISLAMABAD: If the government does not abolish the subsidies on petroleum products by July, then Pakistan will default, Finance Minister Miftah Ismail said Monday.

Speaking during Geo News' programme “Capital Talk”, the finance minister said the International Monetary Fund (IMF) has insisted on abolishing the subsidies on petroleum products.

In a bid to bring economic stability and revive the stalled multi-billion-dollar IMF programme, the government had increased the price of petrol by a whopping Rs60 per litre last month.

It was also expected that after the budget, some hurdles would be removed in the IMF programme’s revival. But the finance minister last week said the IMF "was still unhappy with the government over the budget" mainly because it did not implement the Personal Income Tax (PIT) measures suggested by it.

Miftah had also said last week that there was no financial emergency in Pakistan after the government took steps to rectify the ongoing economic turmoil and increased the price of petrol.

But in today’s interview, the finance minister said if the government does not increase the prices, the IMF will not strike a deal with Pakistan, and if this happens, then the country will be pushed toward "destruction."

“I have told the prime minister that we have to take tough decisions. The prime minister is unhappy with increasing the prices of petroleum products. Whenever I send a summary in this regard, the ministers curse me,” Miftah lamented.

The finance minister claimed that the government was still giving Rs19 subsidy on petrol and Rs53 subsidy on diesel, adding that Sri Lanka also gave subsidies to its public and it, eventually, defaulted.

“Today, Sri Lanka is purchasing expensive oil and they do not have funds to buy medicines for their people,” the finance minister said as he warned of a similar situation in Pakistan.

Miftah added that the PTI government did not make the decisions it agreed upon with the IMF. “We are in talks with the IMF; the PTI did not strike a good deal with it.”

He said that once the agreement with the IMF is reached and Chinese banks extend their loan facility to Pakistan, the market will regain confidence.