Miftah talks about default

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THE Government has taken a number of tough decisions to appease the International Monetary Fund (IMF) but ironically Minister for Finance and Economic Affairs Miftah Ismail is still apprehending a default if subsidies on petroleum products were not withdrawn.

In an interview, he said if the government does not increase the prices, the IMF will not strike a deal with Pakistan, and if this happens, then the country will be pushed toward “destruction.”

The repeated warnings by a responsible minister are apparently aimed at preparing psychological ground for acceptance of some more bitter decisions by the people of Pakistan, who are already groaning under the unending increase in the inflation.

The recent wholesale increase of Rs.60 a litre in the price of petroleum products has triggered a fresh wave of price-hike as transporters have hiked significantly fares and transportation charges, service providers have increased their rates and cost of production has gone up leading to unbearable burden on the masses.

However, the worst aspect of the entire episode is that the lender is still not happy and wants total elimination of subsidy on petroleum products, which would mean another hefty increase and resultantly accompanying inflation.

We have been pointing out in these columns that consumers in Pakistan are hit in two ways – any increase in the prices of oil in the international market is passed on to them as elsewhere in the world but they have to pay the additional cost because of constant devaluation of rupee.

The rates of petroleum products in Pakistan would be much less (than the existing ones) if the exchange rate is stabilized at Rs 160 or Rs 170 as has also been claimed by former Finance Minister Shaukat Tarin and PML-N’s economic wizard Ishaq Dar.

However, strangely enough the Government is not paying attention to currency stabilization and instead rupee is heading towards 210 a dollar, raising suspicion that the Government was tacitly resorting to devaluation under pressure from the IMF.

Similarly, the IMF is also dictating the Government on personal income tax and there are reports that the relief that the Government has provided to the salaried class in the shape of enhancement of the ceiling for taxable income might ultimately be withdrawn.

All this shows that the country was badly in the grip of the IMF and there are serious questions about the economic sovereignty of the state.

It is high time the Government and the Opposition should keep their political differences apart and agree on a Charter of Economy that leads to self-reliance and lesser dependence on foreign loans.