ISLAMABAD: The International Monetary Fund (IMF) has calculated that Pakistan needs Rs 1,416 billion. in subsidies for keeping fuel prices unchanged on per year at prevailing current prices in in international market so Islamabad will have to remove fuel subsidies for achieving financial sanity.
on electricity, government requires a subsidy of 139 billion rupees on in year. The IMF objected over violation of continuous performance criteria under the $6 billion Enhanced Financing Facility (EFF), which required Islamabad not to “impose or tighten restrictions on imports for balance of payment purposes.
Under performance criteria, it was decided that within program period, Pakistan will not impose or increase restrictions on creation of payments and transfers for current international transactions, introduce or modify a multi-currency practice (MCP), with the exception of MPCs arising from the introduction and/or modification of some-price currency auction system operating in line with IMF Staff Council with Target of supporting flexible market- certain exchange rate enter into bilateral payment agreements, incompatible with Article VIII of IMF Articles of Agreement; and impose or tighten restrictions on imports for balance of payment purposes.
Sources said the IMF objected over in move ban on import of luxury items as government publicly announced what will it be help reduce import value of $4-6 billion on in year. The World Trade Organization (WTO) and the IMF opposed moves forbid trade and create any of distortion in trade mode.
There are certain criteria for introduction of temporary restrictions for those countries facing strict balance of payment crisis. IMF also objected that government moved forward just before initiation of scheduled talks with Fund mission and preferred move forward without proper consultation. ” government agreed to raise prices for fuel and electricity in staggered and hiking of POL products and electricity prices will be finalized within policy ministerial level discussions for Finance Miftah Ismail and the IMF mission chief says in Doha, Qatar) next week”, top official sources confirmed while talking to The News on Friday.
On the cash bleeding power sector, government going on a hike power rate for all these consumers who are using units of electricity of more over 300 units on monthly. full cost of recovery from users of over 300 units are under consideration, but government reflects on options to reduce political cost attached with implementation of this proposal said official.
For rebirth of stopped at $6 billion. program of IMF, Pakistan was left with there is no other options but raise fuel and electricity prices because fiscal prudence is not allow continuation of unsecured subsidies for next fiscal year. government will have to place a targeted subsidy for selected segments of Society.
According to sources, Dr. Abid Qayyum Suleri, Executive Director of SDPI, made presentation to the Macroeconomic Advisory Group during tenure of last PTI led government in its meeting was held on 17 February 2022, which was vetoed by the then ministers. on political motives, and then approved a general subsidy on POL products and electricity on February 28, 2022 As a result creating fiscal hole of 118 billion rupees on existing prices in May 2022
Ministry of Financial sources said that ED SDPI Dr. Abid Suleri in his proposal stated that the price increase of gasoline, as well as growth demand pressure on limited supply chain, as a result in strong inflationary impact for low and lower middle income individuals.
To help, the government of Pakistan supplies subsidized gasoline and often down OGRA proposals for increase in fuel prices. However, the section of media and opposition parties do not recognize this gesture. There is another aspect to this situation.
In Pakistan, 15 million motorcycles (and three-wheelers) consume 35-40 percent of petrol. It follows that almost half of in governmentConsumers use subsidized gasoline who can afford it higher Prices.
Give maximum relief for motorcycle/tricycle drivers stated that they are invited to provide cash subsidy whenever gasoline price goes beyond a certain threshold for two weeks, using Mechanism of the Ehsaas Ration Raayat program.
Below are key goals of scheme: a) Efficient use of oil subsidy b) improve procurement power of target beneficiaries buy petrol. c) Shrink any room for filthy play and ensure transparency.
Mechanism: Under the scheme, targeted beneficiaries will be paid cash subsidy through Ehsaas/Ehsaas plus card whenever the price of gasoline exceeds a certain threshold for two weeks (this threshold should determined in consultation with ministries of Oil and Finance). The subsidy will directly transferred to bank Accounts of the consumer follows the mechanism of Ration program Ehsaas.
As it will be work? Eligibility: All motorcycle/tricycle owners are eligible. for this direct transfer program, provided that their monthly income falls below definite threshold (The threshold is determined in consultation with BISP). CNIC will key for this goal. Target beneficiaries can check their status of eligibility by sending a text message with the CNIC number to 8171.
Information of motorcycles registered against any CNIC would be available through vehicle registration department (excise and tax), and welfare score of CNIC holders will available through national socio-economic register in BISP. Only one motorcycle/rickshaw will receive cash subsidy, if more how one motorcycles/tricycles registered against CNIC. Consumers who previously not eligible for Ehsaas program like for For example. government employees can apply for Gasoline Cafalat program.
amount allowable will be calculated based on on average allowable fuel consumption for subsidy for each household. For example (this can be improved in consultation with oil ministry) cash amount equivalent to 2 tank refills for Motorbike of 125 cc, 1.5 full fills for Motorbike of 70cc and three full fills for rickshaw driver in two weeks may be acceptable for subsidy. The consumer will pay full price at filling stations, amount of calculated subsidy will be transferred directly to bank Account. government still have option not pass on in full OGRA recommended fuel rates to consumers so that owners of vehicles below 1000cc can be protected against fuel price go, he concluded.
