Ishaq Dar, Pakistan’s finance minister, announced on Thursday a power subsidy programme with an electricity cost per unit set at Rs19.99 for the country’s export-oriented sectors.
He described the demand for energy subsidies as “fair” and pledged that the government will pay the difference between the new fixed price and the real per-unit manufacturing cost in a media interview following negotiations with the Pakistan Textile Exporters Association (PTEA) in Islamabad.
“I anticipate the industry to boost Pakistan’s exports now.”
The “all-inclusive” programme was announced for the five main exporting sectors, not just the textile sector, according to Dar, who estimated that the annual cost of the subsidy will be in the range of Rs90-100 billion.
According to him, “all would be taken care of,” and he denied that the subsidy would have any effect on the primary or budget deficit.
The finance minister responded to a question about whether the International Monetary Fund (IMF) had been given the green light on the package by saying, “I don’t need to take [the IMF] into confidence […] when I know what I am doing, then it is my responsibility to create [fiscal] space for it and I have done so.”
Dar continued, saying he had a source of funding for the package and adhered to the philosophy of making “prudent decisions.” When discussions are held with the IMF mission and when they arrive on October 25, he continued, “[I will explain it personally].”
Dawn had previously reported that the minister was thinking about providing the textile industry with a sizable package of energy subsidies to help it compete with neighbouring nations.
In order to educate the government about the nation’s escalating energy costs, which made textile exports less competitive in comparison to those of other regional nations, the PTEA organised three meetings with former finance minister Miftah Ismail earlier this year.
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The finance minister also addressed the ongoing devaluation of the US currency relative to the rupee, claiming that nothing at all was done to cause the situation.
“I want to be clear that I can actually demonstrate that its (the dollar’s) real value is less than Rs200.”
He claimed that the market was now correcting itself and moving in the “proper path.”
According to Dar, the currency’s gain today reduced national debt and liabilities by over Rs2,600 billion without “giving up even a single rupee.”