Due to pre-budget events like Currency Free Fall, Highest Interest Rates, Massive hike in Energy Prices, actual inflation will be above 20 per cent to 25 per cent with economic growth of 2-3 per cent
“As per our estimate, with the current budget, country will actually face a Fiscal Deficit of 8.7% i.e. Rs 6799 billion,” he said in a tweet here on Saturday.
“Due to pre-budget events like Currency Free Fall, Highest Interest Rates, Massive hike in Energy Prices, actual inflation will be above 20 per cent to 25 per cent with economic growth of 2-3 per cent.
Finance Minister Miftah Ismail has claimed in his speech that the inflation for the year 2022-23 will be around 11.3 per cent, while the economic growth would be 5 per cent.
Miftah Ismail said the priorities of the federal budget are “fiscal consolidation” and providing relief to the underprivileged public, as he spoke of reversing the “damage wrought by Imran Khan” at a post-budget press conference.
“Growth and inflation are our targets, but our first target is fiscal consolidation, to move the country away from the point where Imran Khan left it at,” Ismail said in the media briefing alongside Information Minister Marriyum Aurangzeb and Minister of State for Finance and Revenue Dr Aisha Ghous Pasha.
Fiscal consolidation entails policies aimed at reducing government deficits and debt accumulation, according to the OECD.
“Our second target is to give relief to our poor people and for which we are taking difficult decisions,” he added, stressing that the government was trying to save the country’s finances and not allow it to become another Sri Lanka.
Yesterday, he presented the coalition government’s federal budget 2022-23 in the National Assembly, which had a proposed an outlay of Rs 9,502bn, almost a trillion rupees higher than last year’s outlay.
In his presser today, Ismail began by cautioning that the country was going through an unprecedented period, which he described as “very difficult”.
“I have never seen a more difficult time in the past 30 years where on the one hand the international environment is very challenging and [on the other] the government or administration has worsened [the matter] and nothing was done to resolve issues,” the finance minister said.
He offered some figures for what the government had been doing in the current fiscal year. With regard to electricity subsidies, he said Pakistan paid more than Rs 1,100 billion for the purpose.
Moreover, he said, the government is compelled to pay Rs 500 billion in circular debt.
Ismail said that despite having “one of the most efficient units of power generation in the world”, Pakistan is producing electricity at costly rates. “Why is it pricey? It is because of poor administration,” he added, referring to the previous government.
Speaking of energy, he said when there was a loss of ‘Rs 1,100-1,600 billion’ to the federation, “it will sink the company”.
He said he was “not being alarmist”, but Pakistan’s economy “cannot bear it”. He said the Rs 1,600 billion amount is more than the defence budget and what is spent on running civilian government combined.
When it came to gas, Ismail said a subsidy of Rs400bn was given in the current fiscal year. “You are buying gas for $20 and selling it for $1-2 — from where will the state bring the money?”
He asked people to look at who was giving the subsidy and who was receiving it. “On average, those giving the subsidy have an income of less than Rs 50,000 per month and those receiving it have income in the hundreds of thousands.”