Inflation up worldwide, Pakistan no exception: Tarin

ISLAMABAD: Federal Finance Minister Shaukat Tarin has said Pakistan is no exception inflation has increased worldwide. He told a presser Wednesday that there would be more inflation following the IMF programme.

Announcing some policy decisions, he said the government has decided to impose 100 percent cash margin and regulatory duty on non-essential items to discourage rising import bills. The step is aimed at averting the heating up of the economy through fiscal measures as the finance minister argued that GDP growth should not jump up to 6 percent from 4 percent in one go.

The government has decided to abolish taxes on ghee/cooking oil thus prices of cooking oil should be reduced by Rs43 to Rs50 per kg. The price of wheat flour should also be reduced in the domestic market.

“The shipment charges on per container has escalated manifold and supply-side constraints after the emergence of COVID-19 pandemic have also disrupted the smooth supply of commodities after which the prices witnessed the highest ever surge in the international market in the last 40 to 50 years. The exchange rate witnessed pressure in the wake of higher oil prices, scarcity of dollar inflows, smuggling of dollars into Afghanistan, and exporters withheld their dollars abroad. The rupee devaluation against the dollar also put some pressure on price hike” Federal Minister for Finance and Revenue Shaukat Tarin said while addressing a news conference here at PID on Wednesday.

Flanked by Minister of State for Information and Broadcasting Farrukh Habib and Special Assistant to PM on Food Security Jamshed Iqbal Cheema, Finance Minister Shaukat Tarin said that the government would restore magisterial powers for checking price hike which was withdrawn during the Musharraf regime. He said that the restoration of magisterial powers with envisaged timelines would be finalised in consultation with PM Imran Khan.

He said that the State Bank of Pakistan (SBP) had managed foreign exchange by selling and buying dollars but he did not think that the central bank had intervened by selling hefty amounts into the market. The exchange rate, he said, should be a reflection of the real effective exchange rate (REER) which stands equivalent to 97 percent of the rupee’s value at the moment.

He said that the upcoming review talks with the IMF would focus on the revenue and power sector but there were no prior conditions attached to these review talks. The government had taken a principle stand that the tax rate on existing taxpayers could not be doubled while the power tariff could not be hiked to tackle circular debt. Now the FBR’s tax revenues have gone up sharply while the flow of the circular debt has also reduced, he maintained.

The minister said that the government would provide cash subsidies to 12.5 million households on wheat flour, sugar, ghee/cooking oil, and pulses. He also announced that the government would ensure strategic reserves for all essential food items such as onion and other food items.

The minister said that the logistics cost had gone up sharply as the price per container increased from $1,500 to $7,000 to $8,000 per container. The commodities prices had also risen sharply as they surged the highest ever in the last 40 to 50 years period, he added.

The CPI-based inflation has started receding, as it stood at 9.3 percent in the last fiscal year which now has declined to 8.4 percent. Food inflation in urban areas stood at 15 percent last year which has now decreased to 10 percent while food inflation in rural areas has decreased from 17.8 percent to 9.1 percent.

Sugar prices in the international market have increased from $240 per metric ton to $430 per metric ton as they had gone up by 80 percent in the international market. Palm oil prices have increased from $760 metric ton to $1,136 per metric ton, registering a surge of 50 percent and crude oil went up by 58 percent in the international market.

The minister said that the government has decided to abolish taxes on ghee/cooking oil so the price would decrease by Rs43 to Rs50 per kg in the domestic market. Wheat prices had gone up by 32 percent in the international market while they had increased by 13.8 percent in the domestic market.

Petrol price stands at Rs123 per liter while the price in India is in the range of Rs 250 per liter. The prices of POL products are less than 30 to 40 percent compared to regional states, he said. He said that the government had increased petrol price by Rs5 per liter and also jacked up diesel price by Rs5 per liter against the recommendation of Rs10 per liter by OGRA because the consumption of diesel was on the higher side and would have cascading effects.

SAPM on Food Security Jamshed Iqbal Cheema claimed that the prices of all commodities as well as POL products were less than many regional and comparable economies. He was of the view that the POL prices were standing at 87 cents in the five-year rule of the PPP from 2008 to 2013, 79 cents in PMLN rule from 2013 to 2018 and in the last three years rule of the PTI, it stands at 67 cents.

Minister of State for Information and Broadcasting Farrukh Habib said PM Imran Khan was very sensitive about price hikes so he always advised his ministers to take measures to provide relief to the common man.