ISLAMABAD: As Pakistan faces escalating inflation, Interim Finance Minister Shamshad Akhtar cautioned that the country’s economic situation was worse than anticipated. She said that the government lacks the fiscal capacity to provide subsidies. She made the comments during a meeting of the Senate’s Standing Committee on Finance.
Akhtar noted that the interim government has inherited an International Monetary Fund (IMF) program, which is non-negotiable. Rising costs of living, particularly soaring electricity prices, have led to protests across the nation. The government is navigating the balance between avoiding IMF displeasure and addressing citizens’ grievances.
The Finance Minister highlighted that government institutions were incurring significant losses and emphasized the need to expedite privatization efforts. She mentioned that a substantial portion of Pakistan’s tax revenue is directed towards debt relief. Shamshad also the rupee was under pressure due to low dollar inflows and high outflows.
She stressed that if the IMF agreement wasn’t upheld, dollar inflows would halt, worsening the economic situation. However, she emphasized the need to look for measures beyond the IMF program.
Akhtar lamented that previous policies have weakened the economy, with the FBR’s revenue being low while expenditures remain high. She clarified that the caretaker government has limited powers and would work within those constraints.
She acknowledged that the proposal to withdraw privileges for the affluent class was being considered. Concerns about rising dollar value and high electricity bills were raised by committee members during the meeting.
In a recent cabinet meeting, the interim government expressed the challenge in addressing the issue, even considering spreading electricity bills in installments.
Interim Information Minister Murtaza Solangi stated that the government was in discussions with the IMF regarding relief measures for electricity consumers.
