Aftervunveiling fiscal year 2022-23 budget plan, Finance Minister Miftah Ismail claimed the government would shortly stop subsidising fuel.
There were hopes that a $6 billion International Monetary Fund (IMF) loan programme, suspended for months due to policy breaches, may be restored in Pakistan’s “toughest” federal budget for the fiscal year 2022-23, which had an outlay of Rs9.5 trillion.
The new fiscal year, which begins in July, won’t have any subsidies; instead, petroleum goods will be subject to a positive tax, according to Ismail.
“Like Srilanka, we don’t want to lead the country into bankruptcy.” In order to move the country forward, harsh decisions must be made,” he continued.
Because “we are still giving subsidies on fuel and diesel,” according to the finance minister, the current government has not yet levied any petroleum product taxes.
As a result of the enormous deficit, the country continues to seek financial packages and assistance on a daily basis. This means that we will have to take action, even if it means raising taxes, in order to meet the challenge, “he stated.
“We are optimistic about falling worldwide oil prices,” said Ismail. “We will boost the levy, else it will be impossible for us to meet the aim.”
For FY22, the previous administration had set aside Rs30 in levy and a 17.5% sales tax, according to the finance minister, and the government can choose between the two and “will see which to implement.”
“We don’t have any option left except to engage with the IMF as the government has to pay a big sum in debt next year,” he said, rejecting the notion of managing the economic crisis without the IMF’s assistance. Pakistan would likely default if the government abandons the IMF’s bailout package.”
It’s not going to happen, he insisted, and he promised to meet with the IMF soon.
The finance minister went on to remark that following an increase in petrol prices on the international market, Pakistan’s inflation rate will no sure rise as well, with a predicted objective of 11.5% in the budget for FY 23.
As a result of the SBP’s efforts to raise interest rates, he believes that monetary policy is currently heading in the direction of contraction, which will aid in the management of inflation.