Govt to take IMF in confidence before implementing new fuel subsidy plan

May 09, 2023 (MLN): The government will take the International Monetary Fund (IMF) in confidence before implementing a new fuel subsidy plan wherein the poor will get relief, Muadik Malik on Tuesday said during an interview with Bloomberg. 

The country is already suffering from a debt crisis and rising inflation which have hit very hard the pockets of already struggling people. 

While discussing the government's plan to make fuel prices costly for the rich and cheap for the poor, the minister in response to a question of Newyork based Bloomberg Anchor Shery Ahn, stated that the plan is similar to the one implemented in the gas sector, where the government charged a high price for natural gas to the rich, effectively subsidizing the poor class.

 However, the IMF had some reservations about the plan, and the government is open to discussing it further with them.

With regard to the plan to reduce debt in the energy sector, the minister said that it has tried to be resolved by asking state-owned companies to issue dividends.

The government's plan to charge the rich more certainly helped to take care of circular debts that were difficult to finance, and the government successfully got rid of that debt.

Nonetheless, there were still outstanding debts remaining that needed to be paid off. For this, the government opted equity swaps or issuing dividends in payoff could be used to take care of them.

The government is still working on this plan and coming up with a mechanism to issue dividends and pay off the debts, he added.

Pertaining to the elections, the minister informed that the elections will be held during the last days of this year which eventually complete the tenure of five years compared to the previous elections. 

"The term of this current administration finishes around October and I think that is exactly the end of the five-year term," he said. 

"The government had to make a bunch of very difficult decisions and given the high inflation and poor macros, the authorities are trying to restructure the economy as we go along," he noted. 

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