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‘Reckless’: Miftah lays into govt for freezing fuel levy without IMF nod

Former finance minister Miftah Ismail on Sunday termed the government’s decision to not increase the petroleum development levy (PDL) this month without the approval of the International Monetary Fund (IMF) “reckless”.

He maintained, however, that what the previous PTI government did with the country was “unforgivable”.

Ismail made the comments in response to PTI leader and former finance minister Shaukat Tarin’s tweet, in which the latter called out the PML-N for its alleged doublespeak.

“We were blamed for violating IMF conditions. According to Miftah sahib, they did not wait to get clearance from MD IMF before announcing the fuel prices. Clear doublespeak,” he tweeted.

In response, Ismail said the PTI government had indeed violated the agreement with the IMF.

“You agreed to increase sales tax to 17pc but reduced it to zero. You agreed to raise petrol levy every month by Rs4 to Rs30 but brought it to zero. You agreed to not give amnesty but gave one anyway,” he said, referring to the previous government’s decision to freeze fuel prices for four months.

Terming that subsidy “unfounded and unsustainable”, Ismail claimed the PTI nearly bankrupted the country. He added that as finance minister, he had gone to the IMF and saved the country from default.

“Not increasing PDL this month without IMF approval is reckless, but what PTI did with our economy was unforgivable,” he insisted.

This was the second time Ismail pointed out in as many days that his government did not get IMF approval before freezing petroleum levy.

While addressing an event in Karachi on Saturday, Ismail said Prime Minister Shehbaz Sharif’s adviser on Establishment Ahad Cheema had asked him to discuss with the IMF managing director if petrol prices could be frozen for three months but “I said that I would die but not ask this.”

“In any case … I asked the MD if we could freeze the tax (PDL) for three months. The answer did not arrive and the government unilaterally did it. So may God have mercy.”

Ismail’s comments come days after the PML-N government, for which he served as the finance minister until last week, announced a cut of around five per cent in the prices of all petroleum products for the next fortnight.

Ismail had resigned as finance minister on Tuesday (Sept 27) to make way for Ishaq Dar. The government decision to slash fuel prices came just three days later on Friday (Sept 30).

The price of petrol was cut by Rs12.63 per litre, bringing down the price from Rs237.43 to Rs224.80. The price of high speed diesel (HSD) was reduced by Rs12.13 per litre from Rs247.43 to Rs235.30. The price of kerosene was reduced by Rs10.19 per litre from Rs202.02 to Rs191.83. The rate of light diesel oil (LDO) was cut by Rs10.78 per litre from Rs197.28 to Rs186.50.

The government took a hit on revenue by reducing the petroleum development levy on petrol by Rs5 per litre to Rs32.42. However, the same was increased by Rs5 per litre on HSD to Rs12.58.

Currently, the government is charging Rs12.58 per litre PDL on HSD, Rs15 per litre on kerosene, Rs10 on LDO and Rs30 per litre on High Octane Blending Component. Moreover, the prices of petrol and HSD also include Rs22 per litre custom duty.

Under the deal with the IMF, the government had to gradually increase the PDL on petroleum products to a maximum of Rs50 per litre to collect Rs855 billion during the current fiscal year.

The previous PTI government had committed a monthly PDL increase of Rs5 on petrol and HSD until it reached Rs50 in January for petrol and April for diesel.

However, before the former prime minister’s ouster, he reduced the PDL to zero on March 1. As the international prices went up, the PTI government not only reduced the petroleum prices by Rs10 per litre but also froze them for the next four months.

After coming to power in April, the PML-N-led coalition government refrained from increasing the prices immediately. However, since May 15, the government has been increasing the prices in line with the IMF deal. As Pakistan battled with the flood catastrophe, the government had requested the IMF managing director for a three-month freeze on the PDL and fuel cost on electricity.

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