No subsidy possible for relief in power bills: Shamshad

ISLAMABAD: While showing helplessness to slash taxes on inflated electricity bills, Caretaker Finance Minister Dr Shamshad Akhtar told senators on Wednesday that the fiscal position was so tied up under the IMF agreement that there was not a penny in coffers for giving any subsidy.

In her maiden appearance in the upper house of the parliament, she presented a very bleak economic and financial outlook while giving a briefing to the Senate Standing Committee on Finance. However, parliamentarians vehemently criticised the economic policies by narrating miseries of the power consumers in the wake of highly inflated bills.

After listening to views, the finance minister replied in a lighter vein that she was wondering why she had accepted the position, but stated in the same breath that it was a responsibility one had to discharge after assuming the office.

“I have inherited the IMF programme, tied up under structural benchmark, signed by predecessor government. It’s not the IMF about which I am worried, but I am worried about political and economic stability of the country. There is no other choice but to continue with the IMF programme for keeping dollar inflows intact from bilateral partners, which is totally tied up under the IMF programme,” Dr Shamshad said. The minister pointed out that dollar inflows were less than the expected outflows, indicating more difficulties surfacing on the dwindling foreign exchange reserves position.

When Senators Mohsin Aziz from the PTI, Sherry Rahman from the PPP, Kamil Ali Agha and Dilawar Khan raised concerns on increased economic woes of inflation-stricken masses, receiving highly inflated bills, the caretaker finance minister made it crystal clear that Pakistan could no more do any stuff which could be termed irresponsible as she possessed 40 years of experience and could not allow doing anything bad anymore. She mentioned that the country could not mobilise its domestic revenues through taxation, non-taxation, surcharges and levies and now there was need to sit down and explore possibilities through stock market options.

Dr Shamshad said Pakistan was import-dependent country regarding fuel requirements. “There is no fiscal space left as everything is spent before our joining the government. There is no fiscal space for subsidies,” she said and added that the fiscal position was very vulnerable.

She said that Independent Power Producers (IPPs) were a reality in Pakistan and they could not turn down their agreements under the binding agreements. The minister said that the losses faced by the state-owned enterprises (SOEs) were simply unbearable. She said the public companies were eyeing dole-outs in 2017 when she had assumed her charge as the then caretaker minister, but now the level of accumulated debt was no more sustainable. “If I will not tell the truth, it will be misleading,” she added.

She said that the government would set up body to supervise these SOEs as currently these were working under the domain of different ministries. There is no other option but to come up with a recovery plan, she added.

“The fiscal overburden is a killer for the economy,” she said and added that the country’s 70 total revenues were consumed by debt servicing. It puts a lot of pressure on monetary side of the country.

The solution, she said, lies in promoting private investment, but it is a chicken-and-egg situation, because the fiscal deterioration ultimately forced the government for tightening of monetary policies through raising the policy rates. The minister promised that she was looking into different matters for discussing it with the IMF for tackling the electricity bills and stated that she would come back to the Senate for giving briefing on the economy of Pakistan the next week.

Deputy Governor State Bank of Pakistan (SBP) Dr Inayat Hussain said that under the IMF agreement, the central bank could not intervene in the currency market until and unless there was a disorderly movement in the market. He said that in the last two surveys, done by the SBP, the inflationary expectations were showing reductions, indicating that the instrument used by the central bank for hiking the policy rate was working. He said that there was an argument that in Pakistan there was no demand-driven inflation but the supply constraints fuelled inflation.

Senator Kamal Ali Agha stated that the parliament granted sweeping powers to caretaker setup and they were not answerable to anyone including voters so they could take all required tough decisions. On this point, the caretaker finance minister replied that they did not have whole required powers and their mandate was limited so they would do whatever was possible under their mandate. The upcoming government, she said, would have to take decision especially for revising the IPPs agreements of required so.

Later, Dr Shamshad issued a video statement, saying her benign statement before the Senate committee was being misinterpreted. She explained, “I had stated (before the committee) that some people ask me why I accepted a challenge in such a critical situation. It’s a great honour to have an opportunity to serve the country. I will do my best to serve the country,” she concluded.