ISLAMABAD: The Economic Coordina­tion Committee (ECC) of the cabinet on Wednesday ordered immediate import of 100,000 tonnes of urea after it was informed that its market price surged to Rs1,850 as the sowing season had just begun.

The ECC meeting, which was presided over by Finance Minister Asad Umar, was informed that urea prices had gone up by Rs150 per 50-kg bag in March despite the official rates of Rs1,700 to Rs1,720, sources said.

The committee also directed the Ministry of Industries & Production to review price mechanism of fertiliser industry and asked the relevant authorities to check market manipulation activities in the fertiliser sector.

Finance minister defends rising inflation, hike in petroleum prices and speaks about delay in jobs creation, expected discovery of oil, gas reserves

It was also informed about the status of National Accountability Bureau (NAB) cases against seven persons allegedly involved in corruption in Pakistan Steel Mills. The interior division informed the ECC that their names had been recommended for placement on the Exit Control List (ECL).

The ECC also approved a series of supplementary grants but decided to maintain their secrecy until the coming budget when it would be placed before the parliament.

The statistics division gave a presentation to the committee about reasons behind 9.41pc increase in inflation and rising prices of various food items. The ECC decided to constitute a sub-committee, to be led by minister for national food security and research, to review the demand and supply situation of essential items and ensure price stability.

The ECC also accorded approval to a proposal of Ministry of Petroleum regarding Fuel Supply Agreement between Pakistan State Oil (PSO) and State Oil Company of the Republic of Azerbaijan (Socar). Socar had been participating in bids invited by the government entities for LNG imports but could not compete other traders due to its higher bids.

The ECC approval to the proposed agreement had been pending for the past six months. PSO and Socar had finalised a term sale and purchase agreement (TSPA) for supply of petroleum products under an inter-­governmental agreement (IGA) signed by the two governments in February 2017.

Meanwhile, Finance Minister Asad Umar answering questions from journalists at a session defended the economic situation and the delay in the discovery of what was being dubbed as a jackpot in the form of discovering a huge reserve of oil and gas, according to Dawn.com

The session was broadcast live from social media accounts operated by the ruling Pakistan Tehreek-i-Insaf (PTI).

Mr Umar explained that work was under way. “The expectation is that a discovery, if made, will be significant,” he said, adding that there was deep offshore drilling being done some 250km from [the coast of] Pakistan.

“They have to drill 5,000-metre deep, of which, last I checked, they had drilled 3,500m. There was some delay due to a rocky formation due to which they had to change their approach. When they finally reach 5,000m, we will know what the find is. But we know that its potential is big. It’s a high-risk operation, and ExxonMobil invests when a potential find is massive. If oil is found, it will be a massive find,” the minister added.

Identifying several reasons why the economy is in a bad shape, the minister, however, said that there would be light at the end of the tunnel. “There are two reasons why we are in this mess. We have a budget deficit, and secondly, our external deficit,” he said.

“To resolve this you either need to increase exports or decrease imports. Our immediate action was to cut imports, which slows down the economy.”

Asked how the government will fulfil the promise of creating two millions jobs every year as growth has slowed down, Mr Umar acknowledged the criticism. “They say that if the economy does not grow at a seven per cent rate, two million jobs won’t be created. As a rule of thumb that [reasoning] is fine, but it [job creation] also depends on what our priorities are,” he explained. Tourism, small and medium enterprises, information technology, and housing were government priorities, and all these sectors had the potential of job creation, he said, while promising that there would be “growth from year three onward”.

About recent rise in petroleum prices, Mr Umar said: “I had never said that petrol should be Rs46. I had said that the tax [on petrol] should be lower than it was.” He said the Oil and Gas Regulatory Authority did the petrol price calculation. “When the new prices were recommended, the only thing the government did was reduce the recommended increase by Rs5,” he added.

When asked why another amnesty scheme was being announced for non-filers of tax returns contrary to his stated position on amnesty schemes in the past, the minister conceded that the idea of amnesty schemes was controversial and said it was the need of the time due to the prevalent system.

The finance minister also defended the government’s decision to not rush into an International Monetary Fund (IMF) programme at the start of its tenure. However, he said, an agreement would be reached soon.

About rising inflation, the finance minister said the issue would be taken up in an upcoming meeting of the ECC. Mr Umar said: “When one attempts to move out of a balance of payment crisis, inflation rises. Ours [inflation in the PTI tenure] has increased but increased lower than theirs [in the first months of the PML-N tenure]. Moreover, in their government, inflation was borne mostly by the lowest income class. This time, the opposite has happened; the rich have suffered.”

*Published in Dawn, April 4th, 2019*