Islamabad Dr. Shamshad Akhtar, the Finance Minister’s representative, has stated that due to the fluctuations in the dollar, there is uncertainty and pressure on the Pakistani rupee, and the economic situation is worse than estimated. He mentioned, “We lack financial capacity, which prevents us from providing subsidies. The IMF agreement has inheritance clauses, making renegotiation impossible.” He warned that if the IMF program is not adhered to, the situation could deteriorate further.
Dr. Akhtar indicated that discussions have been held with the IMF, assuring them of compliance with the agreement. He emphasized that policy changes cannot be achieved overnight. Deputy Governor of the State Bank, Dr. Reza Baqir, informed the committee that under the IMF agreement, the government cannot intervene in the exchange market. He also stated that recent times have seen a decrease in inflation.
Members of the Senate Standing Committee on Finance expressed concerns over rising prices, exchange rate fluctuations, and the uncertain dollar situation. Chairman Salim Mandviwala chaired the meeting. The committee voiced apprehension over the dollar issue causing uncertainty.
Senator Kamal Ali Agha noted that clearing electricity bills has become difficult. He suggested immediate removal of imposed taxes on electricity bills. Senator Mohsin Aziz inquired about the government’s actions concerning the dollar’s value and whether all funds were being directed to specific groups. Dr. Akhtar replied that IMF payments and Pakistan cannot coexist.
Senator Sheri Rahman highlighted the grave situation and the public’s inability to pay bills due to extensive taxation. She stressed that if people stop paying, Pakistan cannot honor agreements. Dr. Shamshad Akhtar informed the committee that a briefing on the economic situation will be given by the end of next week. She emphasized the need to work on managing dollar inflows and internal stability. She stressed the importance of complying with IMF conditions, as external assistance hinges on it. She expressed greater concern over the national economy than the IMF.
It was noted that instead of a direct tax, indirect taxes have been imposed, and the capital market hasn’t been utilized properly. The complete cost of electricity production needs to be recovered. The capacity to provide subsidies is limited.