Finance Minister Shaukat Tarin has announced that the government will raise gas prices in January 2024 to prevent an increase in circular debt and maintain fiscal discipline. In a news briefing, he provided insights into the discussions with the International Monetary Fund (IMF) regarding the energy sector.
During the briefing, Finance Minister Shaukat Tarin informed that negotiations with the International Monetary Fund have reached the staff level, and it is expected that the IMF’s Executive Board will soon grant approval. He highlighted the government’s commitment to the Stand-By Arrangement (SBA) and expressed optimism about the IMF’s executive board giving its approval after the staff-level agreement.
Minister Tarin stated that the government has already implemented the Stand-By Arrangement, and the IMF has emphasized the importance of financial stability. He assured that developmental work would not be halted for financial stability, and progress would continue.
The Finance Minister shared that positive changes are underway in the economy, with improvements in inflation and a reduction in poverty. He noted that tax collections have increased, leading to a comprehensive implementation of the budget for the current fiscal year.
Shaukat Tarin outlined measures to be taken to improve the economy, including a reduction in government expenditures, an increase in agricultural yields, the initiation of public investment plans for development projects, and strengthening social networks for the welfare of the poor. He also mentioned financial assistance for 930,000 economically disadvantaged families.
Addressing the energy sector, Tarin assured that steps would be taken to enhance the electricity and gas industries. Administrative arrangements would be made concerning the distribution companies, and efforts to combat electricity theft by the Power Division were commended.
Finance Minister Tarin mentioned that market-based exchange rates would persist, and efforts would be made to boost foreign exchange reserves. The IMF has suggested additional measures for the financial strengthening of banks.
He clarified that there is currently no decision to impose additional taxes on various sectors, including real estate and retailers. The priority remains achieving the Federal Board of Revenue’s target of Rs. 9.415 trillion, and if there is any shortfall in tax collection, additional measures will be considered.
Regarding international bonds, Shaukat Tarin disclosed that the government has decided to issue a $1.5 billion international bond, and discussions with the IMF have yielded improved credit ratings. Future decisions on issuing bonds will be made after considering current global circumstances.
Finance Minister Tarin underscored the need for ongoing cooperation with the IMF, emphasizing that staying in the IMF program is crucial. He highlighted the importance of completing the ongoing $3 billion program and suggested that discussions on new programs could be considered if the circumstances allow.
Tarin also discussed the initiation of work on the last tranche of the $1.1 billion under the IMF program and informed that discussions with the IMF for the second tranche of $70 million have not imposed any prior conditions. He expressed the need to start work on the last tranche ahead of time.
Shaukat Tarin conveyed that the economic situation in Pakistan is improving, and further progress is necessary for sustained development. He stressed the importance of continued cooperation with the IMF, considering new programs in the future, and maintaining fiscal discipline to achieve long-term economic stability.
