Finance Minister Ishaq Dar on Thursday announced a power subsidy package for Pakistan’s export industries with per unit electricity cost set at Rs19.99.
In a media talk after negotiations with the Pakistan Textile Exporters Association (PTEA) in Islamabad, he termed the demand for energy subsidies “just” and promised that the government would bear the difference between the new fixed price and the actual per unit production cost.
“I expect the industries to now increase Pakistan’s exports.”
Dar said the annual burden of the subsidy would amount to around Rs90-100 billion, adding that the “all-inclusive” package was announced for the five major exporting sectors, and not just the textile sector.
He denied that the subsidy would have any impact on the primary or budget deficit, assuring that “everything will be taken care of”.
Meanwhile, in response to a question on whether the International Monetary Fund (IMF) was taken into confidence on the package, the finance minister said: “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 added that he believed in taking “prudent decisions” and had a source of funds available for the package. “[I will explain it myself] when talks are held with them [IMF delegation] and when they arrive on October 25,” he added.
Dawn had earlier reported that the minister was considering a hefty package of energy subsidies for the textile sector to help it compete with regional countries.
Earlier this year, the PTEA held three meetings with former finance minister Miftah Ismail to sensitise the government about the rising energy cost in the country which rendered textile exports less competitive in comparison with other regional countries.
Market in the ‘right direction’
The finance minister also addressed the continuous depreciation of the US dollar against the rupee, saying that the development occurred without him even doing anything.
“I want to clarify that I can genuinely prove that its (dollar) actual value is below Rs200.”
He said the market was now going in the “right direction” and correcting itself.
Dar added that today’s rupee appreciation brought a reduction of around Rs2,600bn in public debt and liabilities without “giving back even a single rupee”.