The advisor says Pakistan free to set monetary policy, exchange rate
Advisor to the PM on Finance and Revenue Shaukat Tarin has announced that under an agreement with the International Monetary Fund (IMF) the government will increase the petroleum development levy (PDL) by Rs4 every month.
He was addressing a press conference on Monday afternoon hours after the IMF announced that it has reached a staff-level agreement with Pakistan.
The decision to increase the PDL by Rs4 per month comes as the international oil prices decline.
It should allow the government to increase the PDL and keep the petroleum prices unchanged, SAMAA Digital‘s Wakil ur Rehman says.
The finance advisor says Pakistan would meet its PDL revenue target of Rs356 billion which had been lowered from Rs600 billion.
The PDL will be increased to Rs30 per litre, he said.
Tarin told journalists that the IMF has set five conditions for Pakistan. The first was about the PDL increase.
The second condition was about ending the General Sales Tax exemption for all sector so that a universal 17% GST could be enforced.
The third condition concerned the amendment about the State Bank of Pakistan and this delayed the talks. But the amendment would be passed from Parliament.
Under the fourth condition Pakistan was to allow and perform the audit of the Covid-19 vaccine programme.
The final condition is also about a related issue. Pakistan would provide the details of the beneficial owners of the vaccine supplying companies.
Tarin said the PTI government in the past had promised to the IMF that it would increase the power tariff by Rs4.95 and that it would allow autonomy to the SBP.
The advisor said he did not support the tariff increase as it was to affect the economy and this led to a protracted argument with the Fund.
According to Tarin, the IMF urged Pakistan to deliver on its promised.
Similarly, Pakistan also had to convince the Fund that it did not have the majority in Parliament to pass amendment for granting complete autonomy to the SBP and that there were some provisions that were against the constitution such as immunity for the SBP governor from NAB prosecution, Tarin told journalists.
The finance advisor says that although the IMF pushed for the State Bank of Pakistan reforms, Pakistan would be free to set its monetary policy and the exchange rate under the agreement with the IMF
He said the IMF had testified that Pakistan is successfully implementing economic reforms.
Tarin confirmed that the IMF has asked the government to improve the performance of the state institutions.
Tarin said besides receiving $1bn from the IMF, Pakistan will also get “resources” from the Asian Development Bank, World Bank and various countries.