Interim Finance Minister Shamshad Akhtar, on Aug. 30, issued a stern warning about Pakistan’s deteriorating economic situation, revealing that the country’s condition is “worse than anticipated” due to escalating inflation.
Speaking during a Senate Standing Committee on Finance meeting, she emphasized that the government lacked the “financial space” to provide subsidies due to the challenging fiscal environment.
Akhtar stressed the need for accelerating privatization to curb the substantial losses incurred by state institutions. She highlighted that a significant portion of Pakistan’s tax revenue was being consumed by debt relief, while the depreciating rupee faced pressure from low dollar inflows and high outflows.
Akhtar cautioned that failing to execute the IMF agreement would halt dollar inflows, further deteriorating the economy. She urged alternative measures alongside the IMF program to rectify the situation, lamenting that the economy had been weakened through previous actions.
We have limited options and will work within them,” she said, refuting the notion of unlimited caretaker government powers.
Akhtar also disclosed that a proposal to withdraw privileges from the affluent class was being considered. She assured that the committee would receive an economic briefing within a week.
During the meeting, committee members raised concerns about escalating electricity bills and the surging dollar.
Senator Sherry Rehman pointed out the burdensome taxes on power bills.
“We have heard more surcharges will be added in the upcoming days… the situation has broken people’s backs and forced them to the streets.”
Senator Kamil Ali Agha demanded the immediate withdrawal of taxes imposed on bills, highlighting the nationwide impact of a few individuals’ wrongdoings.
Akhtar’s remarks come in the backdrop of Pakistan grappling with soaring living costs, particularly the soaring electricity charges which have ignited nationwide protests.
FM says economy comes first, not the IMF
Striving to appease both the International Monetary Fund (IMF) and the public, the government is treading cautiously.
Expressing her priority for Pakistan’s financial situation, Caretaker Finance Minister Shamshad Akhtar emphasized that the economy of the country comes before the International Monetary Fund (IMF) in her considerations.
Protests over high electricity bills continue
Protests against the escalating electricity bills in Pakistan continue to gain momentum as the government maintains its stance of not reducing energy costs without clearance from the International Monetary Fund (IMF).
Last week, a significant surge in electricity prices led to widespread protests across major cities. Demonstrators resorted to burning utility bills, staging roadblocks, and even targeting power company offices in their outcry.
The government’s lack of action prompted a larger influx of individuals joining rallies and protests throughout the country, including the capital city of Islamabad.
“We are engulfed in an inflationary tide. These bills are insurmountable. If I pay the bill this month, I won’t be able to provide for my three children,” Noorul Amin, a taxi driver, lamented.
Mohamed Karamat, a barber, expressed his financial strain, revealing that he received an August bill of 60,000 Pakistani rupees (approximately $200), a sum that exceeds his means to pay.
Pakistan was subjected to stringent conditions by the global lender to terminate energy subsidies and fulfill revenue targets in exchange for a $3 billion loan granted in July, aimed at resuscitating the nation’s beleaguered economy.