September 08, 2008	Monday	Ramazan 07, 1429

ISLAMABAD, Sept 7: Faced with the highest ever current account and fiscal deficits, the government is expected to announce two weekly off days and closure of petrol pumps for one day in a week to reduce oil consumption.

“An announcement about five-day week and closure of petrol pumps for one day is expected this week,” a senior government official told Dawn on Sunday.

The federal cabinet in a recent meeting decided to take steps to curtail consumption in transport and power sectors, but deferred the announcement till after the presidential election.

According to the decision, Saturday and Sunday will be off days while petroleum products will not be sold on Fridays.

The oil import bill, which surged to $11.38 billion or almost 30 per cent of total imports of about $40 billion in 2007-08, was more than 55 per cent higher than $7.33 billion a year ago, mainly because of higher international prices and increased consumption.

The Economy Monitoring Committee, headed by Finance Minister Syed Naveed Qamar, had directed the petroleum ministry to suggest ways of curtailing oil consumption. Among other things, the ministry proposed two steps -- five weekdays and closing petrol pumps for a day, which could reduce oil consumption by almost 20 per cent, the ministry said.

The last PPP government had also introduced two weekly holidays but the move was soon reversed because it resulted in higher than usual fuel consumption and government employees started taking three off days.

It was witnessed that people moved out of the cities and towns where they worked to enjoy longer weekends. Therefore, the concept of stopping petroleum sales on Fridays is being introduced to discourage the trend.

As a result of record international prices and higher consumption, the government had to pay $4 billion (Rs270 billion) more on oil imports in 2007-08 than in the previous year. The import of petroleum products showed a 65 per cent increase to $6.158 billion from $3.73 billion, while crude imports surged by 45 per cent to $5.22 billion from $3.6 billion in 2006-07.

The consumption of petroleum products went up by about 19 per cent to 10 million tons from 8.6 million tons, while crude imports surged by 5.2 per cent to 8.6 million tons from 8.2 million tons in 2006-07.

The fiscal deficit reached 7.7 per cent of GDP or Rs777 billion against the budgeted target of 4.2 per cent of Rs398 billion. The current account deficit, too, set a new record at almost $16 billion last year with no respite in the initial two months of the current fiscal year.

The government had estimated the oil import bill to stay at $8.8 billion in 2007-08, but it had to pay about $2.6 billion (Rs170 billion) more because the estimates had been based on an expected international crude price of $70 per barrel.

Petroleum emerged as the largest contributor to the total import of $39.97 billion in 2007-08, followed by machinery imports at $7.4 billion, which was 10.32 per cent higher than $6.7 billion of 2006-07.

The government increased duties on more than 250 items last month to discourage import of non-essential products. The opening of letters of credit is also subject to 100 per cent cash margin to discourage importers from unjustified flight of capital. The two measures are estimated to save about $1 billion.