It’s also no surprise that he drenched his statement about whether or not the Fund was consulted before the announcement in ambiguity; saying the matter was discussed “as much as possible” because it’s not very likely that the global lender would take such a sharp u-turn so soon after arm-twisting the government to eliminate subsidies and raise taxes. Besides, slashing petrol prices by Rs10/litre less than a fortnight after raising them by Rs12/l would imply a lightning speed of talks; if indeed any took place in that time.
There’s also something to be said about the minister’s optimism about adopting the line that “the government would tell them (IMF) that the people are already on the streets, so the Fund should show some leniency; otherwise, more people would be out on the streets against the government. Ahead of formal talks with the International Monetary Fund (IMF) on a $6 billion rescue package, Finance Minister Shaukat Tarin said on Wednesday the Fund had been asked to take a lenient view of the recent subsidy package that was announced to prevent people from taking to the streets.
Speaking at a news conference, Mr Tarin said the consultation had been down with the IMF before the announcement of the subsidy package “to the extent necessary”.
He was referring to a recent fuel and electricity subsidy package announced by Prime Minister Imran Khan despite a steep rise in the global oil market. Mr Khan pledged to freeze the new rates until the next budget in June.
“They (IMF) have nothing to do with politics. We have told them not to press hard. Please be gentle or the people would be on the streets,” he said.
Says recent amnesty scheme may ‘smell dirty’, but it’s not
He hoped the talks with the IMF on the 7th review would be successful as all targets for the end-December review period were on track.
He said the government was neither increasing fiscal deficit nor taking loans but using fiscal space on account of better revenues, including those not effectively captured earlier, such as dividends of state-owned entities (SOEs), a cut in the development programme, inadequate Covid-19 funds utilisation and budgeted allocations for the Ehsaas programme.
The minister explained that SOEs had not declared dividends for three to four years. The government had budgeted Rs94bn dividends from these entities, while Rs1.2 trillion worth of dividends of only oil and gas firms had been stuck up in the circular debt. Mr Tarin did not agree that the subsidy package was meant for political purposes and contended that it was an economic package to ease the difficulties of the people. “We have tried to provide a cushion to help people of this country to cope with the super price cycle,” he said. Responding to a question about the decision of the Financial Action Task Force (FATF) to retain Pakistan on its grey list, the minister said everybody knew the motivations as the country achieved success on 26 points and closely missed only one. “It’s all politically motivated,” he said.
Responding to another question, Mr Tarin said he was also opposed to the general tax amnesty schemes, as these were unfair to taxpayers but had only allowed “a targeted and ring-fenced” scheme for investment. He said defaulters and beneficiaries of previous such schemes would not be entitled to the new scheme recently announced by the government. “They wanted to cover a lot in the recent scheme, but I have ring-fenced it and covered only fresh investment in machinery and equipment — not even for land for the industry,” he said. “This may smell like a dirty money whitening scheme, but this is not. It’s targeted and would produce good results.
