Economic situation worse than expected, subsidies not feasible: Finance Minister

In the midst of Pakistan’s ongoing battle with rising prices, the country’s interim Finance Minister, Shamshad Akhtar, issued a strong warning on Wednesday. She pointed out that Pakistan’s economic situation is even “worse” than expected, and the government can’t afford to provide subsidies to the public due to financial constraints.

According to DAWN, Akhtar made these comments during a meeting of the Senate’s Standing Committee on Finance. She explained that the current government had inherited a programme from the International Monetary Fund (IMF) that couldn’t be changed.

This announcement comes at a time when Pakistan is facing high living costs, especially expensive electricity bills that have led to protests across the country.

The government has struggled to find ways to help while also maintaining good relations with the IMF. The caretaker government, which is temporarily in charge, hasn’t been able to come up with clear solutions to ease the situation.

In a recent meeting chaired by Caretaker Prime Minister Anwaar ul Haq Kakar, the government expressed that it’s not sure how to solve the issue. They even discussed the possibility of letting people pay their electricity bills in smaller portions over time, but this would need permission from the IMF.

Interim Information Minister Murtaza Solangi mentioned that discussions are ongoing with the IMF to find relief measures for people struggling with high electricity bills. An official announcement about this is expected soon.

However, it’s important to note that even if the option of paying bills in smaller portions is pursued, it still needs approval from the IMF. This underscores the IMF’s influence on Pakistan’s economic decisions.

Minister Akhtar, while speaking to the Senate’s Standing Committee on Finance, highlighted the substantial losses faced by government institutions. She stressed the need to sell off some government-owned assets to alleviate financial pressure. Currently, a large portion of Pakistan’s tax earnings goes toward repaying debt. Moreover, the Pakistani rupee is facing challenges due to a shortage of dollars coming in and a high amount going out of the country.

Akhtar also expressed concern that if Pakistan doesn’t follow the IMF’s agreement, the country might stop receiving dollars, leading to an even worse economic situation. She admitted that the government has taken actions that weakened the economy. She mentioned that the Federal Board of Revenue is not collecting as much as it should while expenses remain high.

The finance minister clarified that the caretaker government doesn’t have unlimited power. They are restricted in their actions and must work within those limits.

She also pointed out that any changes to the existing IMF agreement, made by the previous government, are not possible for the current administration. She mentioned that the government is considering reducing benefits for the wealthy, and a detailed update on the economy will be provided to the committee within a week.

Before the finance minister’s comprehensive briefing, several committee members expressed concerns about the rising value of the dollar and the high electricity bills. Senator Kamil Ali Agha insisted that taxes added to electricity bills should be removed immediately, arguing that the entire country shouldn’t suffer due to a few people’s actions.