Former president Asif Ali Zardari spoke with Prime Minister Shehbaz Sharif about the nation’s general political and economic situation.
In a meeting at Prime Minister House in Islamabad, the leaders of the Pakistan Muslim League (PML-N) and Pakistan Peoples Party (PPP) discussed strategies for reviving the economy and dealing with the fallout from the politically difficult economic decisions that the prime minister is expected to make in an effort to restart the stalled International Monetary Fund (IMF) loan program.
At the meeting was Senator Saleem Mandviwala from the Pakistan Peoples Party (PPP), Finance Minister Senator Ishaq Dar, Economic Affairs Minister Sardar Ayaz Sadiq, and Railways Minister Khawaja Saad Rafique.
The political climate in Punjab and Khyber Pakhtunkhwa with the establishment of caretaker governments was another topic of conversation between the two leaders. They came to the conclusion that the coalition government’s top priority should be reviving the economy.
According to sources, Ishaq Dar, the finance minister, informed the participants about the economic situation and the effects that the difficult choices would have. However, they added, the participants chose to guarantee the existence of a system that controls inflation.
An increase in power and gas prices, better tax collection, the introduction of a petroleum development fee, a market-determined dollar rate, and other painful measures were required to resurrect the IMF program.
The rupee depreciated by over 1% against the dollar on Wednesday as a result of the elimination of the unofficial dollar ceiling.
The rupee fell 2.25 or 0.92% to settle at 243 versus the dollar, according to a statement from the Exchange Companies Association of Pakistan (ECAP), down from a range of 237.75-240 at Tuesday’s closing.
The government intends to recover Rs800 to Rs850 billion with the new price increase in order to reduce the enormous circular debts of Rs1,640 billion owed by the SNGPL and SSGCL.
In the meantime, during the current fiscal year, the government is proposing increasing the energy rate from Rs4.50 per unit in the first phase to Rs3 per unit in the second.
The government had set a target for FBR tax collection of Rs7,470 billion, however, up till December, FBR fell short by Rs225 billion. By a margin of Rs82 billion for the end of December 2022, the collection fell short of the IMF’s target.
To raise Rs100 billion, the PML-N government intends to impose a 1%–3% flood charge on imports.
Second, the government is also thinking about taxing commercial banks’ claimed gains from manipulating the exchange rate between 60% and 70%. The banks calculated that in the first nine months of the year 2022, unusual earnings totaled about Rs100 billion.
In addition, there will likely be a GST imposed on POL items as well as an increase in the Federal Excise Duty (FED) on cigarettes and sugary beverages. Ishaq Dar, the finance minister, vehemently opposed placing a 17% GST on POL items in the past, claiming that it would be extremely inflationary.