‘Benefits of low POL prices not reaching common man’

ISLAMABAD: The government has not passed on full benefits of reduced international prices of commodities, especially those of wheat flour, petroleum products and electricity, to domestic consumers.
“The price of wheat flour should have reduced by Rs9 per kg in domestic market, POL prices by Rs10 per liter and electricity prices by 25 percent after massive decline in the furnace oil prices but the government has not passed on full benefits to consumers,” said former minister for finance Dr Hafiz A Pasha, who is also heads Institute of Policy Reforms (IPR), while launching six-month economic review for 2014-15 here on Thursday.
Dr Pasha said that it was bizarre move of the ECC to raise the support price of wheat and slapping regulatory duty on export of the commodity, as the government is subsidising foreigners at the cost of domestic consumers.
Severely criticising the exchange rate policy being pursued by the government, he said that Pakistani rupee was overvalued by 18 percent against US dollar, which was hurting exports badly.
He said that China, India, Indonesia and Turkey had devalued their currencies against US dollar while Pakistan’s finance hero managed appreciation of rupee by 15 percent that virtually destroyed the benefits of GSP-plus. Pakistani rupee, he said, has appreciated against euro and still there are expectations of increasing benefits from GSP-plus.
Comparing defence budget and law and order spending between Pakistan and India, he said that Pakistan had so far maintained 1:3 ratio with India in defence spending but with the recent hike in India’s defence budget India’s budget has increased by 4.5 times our defence budget. India has also increased its spending on police by 8.5 times compared to Pakistan despite the fact that Pakistan is implementing National Action Plan (NAP) under which security expenditures are bound to increase.
Answering a query about IMF, Dr Pasha said that IMF has turned into European Monetary Fund (EMF) where the whole focus has shifted to the ailing economy of Greece while in comparison the bailout package of $6 billion for us was too small so the IMF was treating us softly in our case.
Power load shedding continues unabated in the country. Its three elements showed a mixed trend. Machinery import increased by 6% and important segments such as textiles and agriculture saw double-digit decline. Tardy PSDP releases meant low public investment.
Foreign exchange level increased also because of successful Sukuk bond float of $1 billion and release of $1.1 billion from the IMF. Dr Pasha considered some IMF projections for the economy optimistic. The IPR estimates that actual tax and non-tax revenue may be about Rs150 billion below the IMF forecast and expenditure would remain significantly higher.
Earlier, Humayun Akhtar Khan, chairman IPR, stated that it was alarming that the growth continued to be stagnant and it would remain hovering around 4 percent of GDP for the ongoing fiscal against envisaged target of 5.1 percent.
“The government has not pursued any worthwhile reforms in taxation and energy sectors,” he said and added that the higher economic growth could be the key for bringing peace in the country.Low growth, he said, could become a dangerous syndrome and noble intentions and setting of ambitious targets would not resolve our problems.