The caretaker government has decided to increase the gas prices in January 2024, as the country braces for the winter season when the use of fuel spikes.
Interim Finance Minister Shamshad Akhtar told this to reporters in Islamabad while speaking about the International Monetary Fund (IMF) programme.
The international lender reached a staff-level agreement with Pakistan on Wednesday. Under the first review of a $3 billion standby arrangement, the country would receive $700 million after approval from the Fund’s Executive Board.
This would be another rise in the gas prices after the caretaker cabinet approved a whopping increase of up to 3,900 per cent in the fixed monthly charges and 194 per cent in the consumer rates for natural gas last month. The increase in gas tariff would not affect 57 per cent of consumers, according to the government.
In February, the previous government had increased gas tariffs by up to 113% for different categories of consumers for six months to have the much needed International Monetary Fund deal.
Pakistan, which is facing 8% to 9% gas depletion every year from its own reserves, has been looking for avenues to meet its demands. Bids for 10 onshore blocks would open this month while the caretaker government was also looking into inviting bids for 24 offshore blocks in the first phase in December, Power Minister interim Power Minister Muhammad Ali said on September 8.
The interim finance minister told reporters that the government has not yet decided to impose taxes on different sectors, including real estate and retailers.
Media reports claimed that the IMF had asked Pakistan to tax the above mentioned sectors in the country to support the economy.
The IMF statement acknowledged that Pakistan authorities were building capacity to expand the tax base and raise revenue mobilisation.
“FBR’s tax collection target of Rs9,415 is the first priority,” Akhtar said and that the government would “think about” additional measures if there was any shortfall in tax collection.
She added that Pakistan has deferred its decision to issue $1.5 billion worth of international bonds until the signing of the agreement with the IMF as it would improve the country’s ratings.
Also, read this
The stock market and rupee surged on Wednesday, a day after the IMF’s review success. The KSE-100 index closed at 57,397.02 points, up 716.96 from the previous close of 56,680. The rupee rose by 0.26% against the dollar in the interbank market. The national currency closed at Rs287.38.
According to Akhtar, it was expected that Pakistan would get $2 billion worth of funds from the World Bank while around $1 billion of inflow was expected from the Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank.
“Pakistan’s economy has improved and more work was needed for further improvement,” she said and added that it was necessary for the country to remain in the IMF programme.
“Right now, we have a priority to complete the $3 billion loan program,” Akhtar said and hinted at talks for a new programme with the IMF.
She was of the view that it was important to stay with the international lender until the increase in exports and local manufacturing.
The work for the last installment of $1.1 billion under the nine-month loan programme has to start “now,” she said and added: “The IMF did not impose any conditions for the release of the second installment of $700 million under the agreement.”