US to release $1 billion from accumulated Coalition Fund

[LahoreEstate]

ZAHEER ABBASI
ISLAMABAD (February 25 2009): Advisor to Prime Minister on Finance, Shaukat Tarin on Tuesday said that the United State will soon release $1 billion from piled up Coalition Support Fund created for war on terrorism. Talking to mediamen after the meeting of National Assembly Standing Committee on Finance, Tarin said that one billion dollars from Coalition Support Fund will be received by June and that would help in reducing the budget deficit.

The US had not paid anything to Pakistan for last nine months for its services as coalition partner in war on terror, he added. The meeting was scheduled to take up the issue of essentials price hike. The meeting was told that wheat production could be in the vicinity of 25 million tons this year but the country lacked storage capacity.

The advisor blamed both the international market as well as weak domestic market mechanism for high prices of food commodities. He said that the revival of magistrate system is needed to control prices at wholesale and retail level. The ministry of finance estimates that inflation will be 20 percent by June this year, currently it is more than 23 percent.

Replying to a questions, Tarin said that interest rate would be reduced once the inflation is under control. We are trying to bring down the inflation to a single digit by the year-end, he added. He referred to some positive signs in this connection particularly the Consumer Price Index (CPI) which he said was moving downwards for last couple of months.

The advisor said he would be leaving for Dubai to attend the International Monetary Fund review meeting. Pakistan, he said would also take up the matter for enhancing of loan quota from 5 to 8 percent in the IMF board meeting in Washington this year.

Earlier, in the meeting the government admitted that farmers are not getting the agreed price of Rs 1500 for the paddy. The advisor said corruption in the offices was increasing financial woes of farmers. Rice farmers mainly in Punjab are being paid less for super Basmati paddy.

He feared that if the measures are not taken, wheat growers might face the same situation as the country expects bumper wheat crop this year. Tarin expressed dissatisfaction over the performance of Passco and TCP and said that these departments need revamping. He said that the government is following the policy of deregulation, but the official monitoring of prices is needed to control cartelisation.

The advisor vowed to bring down the core inflation to single digit by December this year from prevailing 18 percent. However, he said that growth rate of 3.4 percent can be achieved this year due to higher agriculture production, but said it may not be possible to achieve revenue target of Rs 1.36 trillion.

The revenue collection is declining and this may increase the budget deficit. Responding to a question by Fauzia Wahab, chairperson of the committee, as to why the government was not passing on the benefit of low oil prices to consumers, Tarin said it was because of revenue shortfall.

He said that collection in terms of Petroleum Development Levy (PDL) was Rs 12 billion whereas shortfall in revenue is Rs 20 billion. This does not give the window of opportunity to the government to reduce oil prices, he added. The Ministry of Food and Agriculture underlined the need of a well-defined strategy for all the crops during its presentation

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