The Finance Minister lambasted former Prime Minister Imran Khan for leading the country to the brink of default through its incompetence.
By Aoun Hussain
ISLAMABAD: Clearly buoyed by his success in clinching a staff-level accord with the International Monetary Fund (IMF) for the revival of a stalled Fund bailout, Minister for Finance Miftah Ismail Saturday proclaimed at a media conference here that Pakistan had successfully averted default.
He took the government of former Prime Minister Imran Khan to task for leading the country to the brink of default, labelling him “a liar” and “incompetent”, but asserted Pakistan was on track to receive over USD 4 billion from friendly countries and another USD 6 billion from multilateral creditors to bridge the financing gap over the current fiscal year.
Addressing a joint news conference along with Minister for Information & Broadcasting Marium Arungzeb, Finance Minister said that the IMF made the assessment that Pakistan was facing a financing gap of USD 4 billion out of a total external financing requirement of USD 35 billion during the current fiscal year.
“Roughly, I can show you within the ongoing month that the friendly countries will fill our external financing gap of USD 4 billion,” Minister of Finance Miftah Ismail said. The minister did not named the countries he says are going to bridge the financing gap.
He said that Islamabad would get a USD 1.2 billion oil facility on deferred payment. Another friendly country will invest USD 1.5 to USD 2 billion in stocks on a government-to-government (G2G) basis. Yet another will provide us deposits in the shape of cash and Special Drawing Rights (SDRs), and another with gas on deferred payment.
The government, he said, had filed a review petition before NEPRA because the government wanted to protect consumers spending 100 units or less of electricity from a hike of PKR 7.91 per unit in base tariff. An increase of over 300 percent in tariffs was proposed for those consumers who belonged to affluent class. He said that hike in gas tariff was not part of IMF condition.
The minister said the signing of the staff-level agreement with the IMF had cleared the way for the ADB to provide USD 3.5 billion and World Bank USD 2.5 billion in development loans. Another USD 500 million will come from Asian Infrastructure Investment Bank (AIIB) during the current fiscal year, while the Islamic Development Bank would also provide financing.
Ismail said the FBR would exceed the current fiscal year’s collection target of PKR 7,470 billion after the withdrawal of blanket subsidies.
The Finance Minster claimed the power sector had accumulated losses to the tune of PKR 1350 billion over the last fiscal year, inflating the sector’s monster of circular debt by PKR 280 billion after the Ministry of Finance provided PKR 1072 billion to the Ministry of Power.
Now the IMF assessed the flow of CD stood at PKR 850 billion out of which over PKR 600 billion cleared by the government through payments to IPPs.
The minister said power sector reaped PKR 1,600 to PKR 1,700 billion in electricity bills, but the government of former Prime Minister Imran Khan caused losses to power sector in every aspects as transmission and distribution losses could not be reduced while collection of billing dropped from 99 to 80 percent.
When coalition government of Pakistan Democratic Movement (PDM) took over, there was shortfall of 7500 MW of electricity. Then there was a gas sector circular debt of PKR 1,300 billion. All these losses led to the country to the brink of default, he said, and added that PDM government led by Prime Minister Shehbaz Sharif had taken bold measures to avert the looming default.
To a query, he said that the privatisation law would be amended. Noting how the SME Bank had been on active privatisation list since 2007 and the Roosevelt Hotel since the 90s but neither could be sold, he said a provision for G2G transactions would be incorporated into the privatisation law.
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