Finance Minister Shaukat Tarin, during a press briefing on Wednesday, enlightened the nation on the economic performance of the government in place. He reminded everyone that the PTI government inherited a balance of payments crisis from the previous government that forced the ruling party to seek the bailout from the International Monetary Fund.
It was a joint press conference in which Minister of State for Information and Broadcasting Farukh Habib and Prime Minister’s Special Advisor Jamshed Dasti also briefly touched on their relevant topics.
The new government decided to apply a floating exchange rate regime and increase the discount rate. As a result, the exchange rate depreciated sharply and inflation skyrocketed. To top it off, the COVID-19 pandemic has further deteriorated the already fragile economy. Global supply chains have been disrupted and production has fallen, which has contributed significantly to already rising inflation.
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Inflation has been a major challenge for the PTI government led by Imran Khan and remains a powerful threat to his bid for reelection. “The CPI (consumer price index) has gone from 9.3% to 8.4% over the past two years,” Tarin told the media.
He further compared food inflation levels in rural and urban areas in July 2020 and 2021. He clarified that food inflation in urban areas had declined from 15% to 10% in the past year, whereas it had gone from 17.8 to 9.1%. % in rural areas.
The government plans to provide food subsidies on wheat, oil, sugar and pulses to 12.5 million poor households. This implies that 40-42% of the population will receive direct cash grants to protect them from their economic vulnerabilities.
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Sugar prices have steadily increased in the world market from $ 240 per tonne to $ 430 per metric tonne. In addition, palm oil prices fell from $ 760 per metric tonne to $ 1,136 per metric tonne.
In a major relief for the people, the government will provide a reduction of 45 to 50 rupees and pay this difference out of its own finances to make essential food items cheaper for the people. In addition to unveiling those plans, Tarin said the government has asked the Competition Commission to take strict action against those responsible for the ghee cartelization.
Responding to recent criticism of rising fuel prices, the finance minister told reporters that the price of crude oil has risen 58% on the world market in the past three years. Recently the government increased the price of gasoline by 5 rupees, against the OGRA recommendation of around 1 rupee.
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He called not to overlook the fact that OGRA recommended raising the price of diesel by 10 rupees while the government only increased by 5 rupees. On this point, the SAPM on Food Security asserted that Pakistan was the cheapest country in the region because oil prices were the lowest in our country.
It should be borne in mind that the SAPM on food security mentioned the prices in other countries in USD-PKR parity, i.e. after converting other currencies into Pakistani rupees. It should be noted that the Pakistani rupee is the worst performing currency in the region at present.
“The PTI government is re-establishing price control committees at the local level to control the prices of goods and commodities,” Habib said. The judiciary system – as it is called – was interrupted during President Musharraf’s rule.
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Commenting on a question asked by a reporter, Tarin said government revenue increased 45%, 24% above the target. This indicates high economic growth, as the Asian Development Bank Outlook report predicted that Pakistan will experience 4% growth in the current fiscal year and inflation will hit 7.5% – the highest in the region.
The ADB said the 4 percent growth rate was contingent on resuming structural reforms later in the year under an ongoing program under the International Monetary Fund (IMF) extended facility.