Former finance minister and PTI leader Asad Umar on Tuesday said that according to his assessment inflation rates would peak in the next two to four months.
While on Geo News’ programme ‘Aaj Shahzeb Khanzada Kay Saath’, Umar said that after the two to four-month period, slowly the inflation rate would start going down. He said that this would then be reflected in the monetary policy and interest rates would also go down.
The former finance minister was responding to a question regarding keeping a fiscal deficit of 7.1 per cent along with a revenue target of Rs5.5 trillion. Anchor Shazeb Khanzada asked Umar if this was the one target to focus on.
In response, Umar said that revenue targets affect the economy in many ways and this was a central factor that needed to be looked at. However, he said that during the period of adjustment when they were getting out of a balance of payments crisis, the fiscal deficit was not the primary factor to look at.
He explained that this was because during this time, in order for demand compression and overcome losses in the energy system, decisions are made that increase inflation and to counteract that policy rates have to be increased.
“A big reason for the increase in the fiscal deficit is due to policy decisions of increasing inflation,” he said, adding that even in discussions with the International Monetary Fund (IMF) the target focus was the primary deficit.
While giving his analysis that inflation would peak over the next few months and then slowly go down, Umar said that right now it was important to pay attention to whether progress was being made on the primary deficit. He said this year there was less progress than they wanted and hoped that next year there would be further progress.
Earlier in the month, State Bank of Pakistan (SBP) raised its main policy rate by 100 basis points to 13.25 per cent, citing increased inflationary pressures and a likely near-term rise in prices from higher utility costs.
At the time, SBP Governor Reza Baqir had said: “If you look at the time-path of this inflation, in the next few months, due to one-time factors, inflation will be higher. These have been accounted for [in our projections]. In the second half of the fiscal year, according to our projections, inflation will be lower. By the start of the next fiscal year, there will be a noticeable decrease in inflation.”
In Tuesday’s interview, Khanzada asked the PTI leader if the (economic) situation had improved or worsened since he had left his post as finance minister.
“The direction hasn’t changed [they] are still going in the same direction adopted by the PTI government from day one,” Umar replied, adding that there are multiple views about every individual decision.
He said that the overall direction was firstly to take Pakistan out of the “worst balance of payments crisis in [its] history” and noted that some “milestones” had been reached in achieving this.
The former finance minister was asked if the direction, based on a model going towards exportable surplus and import substitution, was correct and whether the country would go into a crisis again.
“This will be the real test because the way of getting out of a balance of payments crisis is a classic textbook way of demand and import compression,” he said, adding that the “real test” would unfold over the next couple of years regarding two areas: how is the competitiveness of the economy improved and the revenue target.
Khanzada said that a revenue target of 35 per cent with GDP growth of 2.4pc had never been achieved and asked Umar if it was possible.
“It is a very big challenge,” he responded, adding that currently, Federal Board of Revenue (FBR) Chairman Shabbar Zaidi had the most difficult job.
Tribals seek permission to bring vehicles back from Afghanistan
MIRAMSHAH: The militancy-affected people of North Waziristan tribal district, who took refuge in Afghanistan, have demanded of the government to permit them to bring their vehicles back to their native areas.
Residents of Datakhel tehsil gathered in front of the press club in Miramshah on Friday and staged a protest demonstration, carrying placards and banners.
Malik Nazar Din, an elder of Datakhel, told mediapersons on the occasion that thousands of people had taken refuge in Afghanistan when security forces launched operation Zarb-i-Azb in June 2014.
He said that displaced people fled to Afghanistan in vehicles loaded with their belongings. He said that thousands of people returned to their homes after completion of military operation, but local authorities had placed ban on bringing their vehicles back from Afghanistan.
The elder said that after negotiations the local authorities had promised that the returnees would be allowed to bring their non-custom paid vehicles back to their regions.
But, he complained that the senior officials of the district administration had backed out of their commitment.
Malik Nazar said that authorities were using delaying tactics and their vehicles stranded in Khost province of Afghanistan were being rusted. He said that the affected people would block Miramshah-Ghulam Khan route if their demands were not materialised.
He urged Khyber Pakhtunkhwa Chief Minister Mahmood Khan to take notice of the issue and direct local authorities to allow owners to bring their vehicles back from Afghanistan.
Ex-militant commander shot dead in Khyber
LANDI KOTAL: Unidentified gunmen killed a former militant commander in Akkakhel area of Bara tehsil late on Friday.
Police officials said that two gunmen riding a motorcycle opened fire on Noor Rehman, who was a member of a proscribed group, killing him on the spot.
They said that the assailants managed to escape from the scene after the incident leaving behind their motorcycle which was later seized by the local police.
Officials said that Noor Rehman had surrendered to security forces sometimes ago and had also undergone special treatment in a de-radicalisation centre and was only recently released.
Students take Islamia College to court over fee increase
PESHAWAR: Two students of the Islamia College University Peshawar have moved the Peshawar High Court against the administration’s decision to increase fee of different classes by 10 per cent insisting the move violates its agreement made with students in 2017.
Mohammad Nauman and Mohammad Ijaz filed a joint petition requesting the court to stop the university’s administration, syndicate and academic council from increasing fee.
They also sought orders for the government to keep the seats for open merit and self-finance categories in equal proportion claiming that currently, seats on a self-finance basis are more than those of open merit.
Petition also seeks order for equal seats in open merit, self-finance categories
The respondents in the petition are the Islamia College University Peshawar through its registrar, vice-chancellor of the university, its academic council and syndicate.
The petition filed through senior lawyer Abdul Lateef Afridi said the students of the university had begun a protest and staged a sit-in on Dec 12, 2017, against increase in the fee of the university and college.
It said the protest forced the administration to hold negotiations with students, while a committee consisting of professors and chairmen of different departments was formed for the purpose on Dec 8, 2017.
The petitioners claimed that the deliberations led to an agreement on the matter as the committee accepted all genuine demands of the students on Dec 18, 2017.
They added that the committee agreed that the fee won’t be increased for three years, while the administration would be free to increase fee thereafter.
The petitioners contended that the treasurer of the university had made a request earlier in the year for 10 per cent annual increase in tuition fee for FA/FSc, BS, MA/MSc, MA, MPhil and PhD programmes, which was made part of agenda to be taken up by the academic council.
They said the council, which held its ninth meeting on Apr 24, 2019, with the vice-chancellor in the chair, accepted that proposal and sent it to the syndicate for final approval.
The petitioners said prior to approval by the syndicate, the university included and printed the proposed fee structure in the 2019-20 prospectus in a clear violation of that agreement.
They also said at the time of the said sit-in, the university had an unequal number of students enrolled in the pre-medical and pre-engineering programmes on open merit and self-finance scheme.
The petitioners said pre-medical and pre-engineering programmes had three sections each with 50 students, while there were 250 students each in both categories of classes.
They added that the students wanted the number of students enrolled on the open merit and self–finance basis to be equal but the 2019-20 prospectus had showed the unequal number of seats in the two categories.
The petitioners contended that the agreement between the representatives of students and administration was meant to provide opportunities of education to students belonging to middle class but it had been violated by the administration.
They feared that the breach of that agreement could force students to agitate yet again.
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