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Finance Minister Shaukat Tarin on Thursday vowed to protect both the International Monetary Fund (IMF) deal and the Kamyab Pakistan Programme -the two key policy objectives that seem paradoxical due to the international lender’s objections to the Rs1.6 trillion programme.
The minister, while addressing his first news conference in about two months, also finally admitted that this year’s Rs610 billion petroleum levy target cannot be achieved.
He also quelled the rumors of his replacement, saying that Prime Minister Imran Khan was working on a plan to get him elected as a member of parliament in the next two months to become a permanent finance minister.
To questions about the government’s plans for the IMF programme and launching of the Kamyab Pakistan Programme, the finance minister made it clear that both these programmes would go ahead as per plan.
The IMF has raised questions over the Kamyab Pakistan Programme and the nature of these questions is the same as reported in The Express Tribune, the finance minister said. He said that the IMF raised questions about the capacity to spend Rs1.6 trillion funds, giving 100% guarantees to the banks against their losses.
“We are preparing replies that will be sent to the IMF in the next few days and after that, the two sides would sit and negotiate, the finance minister said.
The Kamyab Pakistan Programme is the single largest initiative ever planned by any government that talks about giving interest-free highly subsidized loans of Rs1.6 trillion to 30 million people over a period of three years. But the bureaucracy and the IMF raised objections to the highly ambitious plan.
The minister said that bridging any loopholes in the Kamyab Pakistan Programme was in the interest of the government and it will take all precautionary measures so that the money safely reached the deserving people.
“I will not let the Kamyab Pakistan Programme explode and any partner institution that will cause more than 10% losses will be excluded from it,” Tarin said while showing his resolve to implement the programme.
The minister also clarified his position as the finance minister. “There are no chances that I would disappear that is why I am sitting in front of you,” Tarin said, quashing rumors regarding his replacement.
“The prime minister has promised to get me elected from the Senate and I have firm belief in his promise,” Tarin said.
The minister said that still there were two months in the expiry of his six-month ministerial term and the premier was working on a plan to get him elected.
A cabinet minister told The Express Tribune that there was a possibility that the PM would get Tarin elected as a senator from Khyber-Pakhtunkhwa.
The finance minister also tried to clarify the air around the fate of the IMF deal amid worsening geoeconomics and geopolitical conditions.
“There is no Plan B and remaining in the IMF programme is in the interest of Pakistan,” Tarin said on the matter of whether the government would quit the programme if the IMF did not endorse the Kamyab Pakistan Programme.
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“The IMF programme is hale and hearty but is in recess,” the finance minister said.
The minister said that Pakistan is set to receive $2.77 billion from the IMF on August 23, confirming earlier reports that the fund’s increased lending capacity would boost the country's foreign exchange reserves.
Tarin said that the funds will directly be sent to the State Bank of Pakistan on August 23. It is unconditional money that will increase our reserves.
“But the money would not be spent unwisely and we will protect the economic stability achieved under the IMF programme,” the minister said.
The IMF's board of governors had earlier approved the increased lending capacity by $650 billion to boost aid for the most vulnerable countries.
When asked about the IMF's stringent conditions, Tarin said that the lender had determined that an increase in power tariff was the only way to reduce Pakistan's circular debt. However, Tarin said that this approach was “counter-intuitive”, adding that increasing tariffs will make the industry non-competitive, which would then lead to inflation anyway.
Due to the government’s refusal to impose Rs150 billion new taxes on salaried class and increasing power tariffs by Rs4.95 per unit, the IMF has delayed the approval of the sixth review that would have cleared the way for the release of $1 billion tranche.
“We have informed the IMF about progress in revenue collection in July and also submitted targeted subsidies plan to Nepra for a decision. But it will take about two months before Nepra takes it, the minister said.
Pakistan will again sit with the IMF in September and review the progress made on the issues of revenue collection and circular debt management, Tarin said. He clarified that Pakistan does not have a plan to merge the sixth and seventh reviews of the programme.
To a question, the minister said that the Rs610 billion petroleum levy target cannot be achieved as the government cannot increase prices beyond a point. The minister said that inflation has started slowing down but a key reason behind the price hike was imported inflation.
The minister said that the prices reported by the deputy commissioners were 25% less than the market rates and the governments have started suspending those officers who are underreporting the prices.
He also said that the current account deficit is bad when it is not controllable and starts affecting the reserves and the exchange rate. He said unlike the past when Ishaq Dar had pegged the rupee, this time the rupee was flexible and was acting as a shock absorber.