Prime Minister Syed Yusuf Raza Gilani on Monday said that the government, despite rising energy costs, had managed to contain current account deficit to 1.7 percent of Gross Domestic Product which helped keep the currency stable.
Addressing at the Command and Staff College Quetta, Gilani referred to record exports of US $24 billion despite economic slow down and energy shortages. “This is the highest ever export figure and is a major achievement in itself,” he said. The Prime Minister said his discourse today was about the vital issues facing Pakistan. In a globalised world, national issues were no longer really national. He said the issues facing Pakistan were not exclusive but followed a cause and effect pattern all over the world. He mentioned the geo-strategic environment of the region which had further magnified this pattern in the last decade since 9/11.
Gilani said there was a strong connection between the socio-economic factors and the security situation. He said global rise in the prices of oil and food commodities had affected Pakistan as well, foreign exchange reserves were depleted and the country was faced with a balance of payment crisis with only three weeks import cover.
He said Pakistan had to approach the International Monetary Fund (IMF) for loans because of its economic difficulties and added that at present the Saudi Arabian oil grant facility was no more available.
One major conditionality for the IMF loan was that energy prices which were on hold for many years should be increased for recovering its generation cost. Similarly budget deficit caps were introduced which further curtailed our ability to subsidize some items to protect the common man against inflation, he added.
He dispelled the impression that the energy shortage was an outcome of a gap between demand and supply. He said there was an installed capacity of 19,000 Mega Watts, including thermal, hydel and gas-based generation while as per international practice, the generation should be 16, 000 Mega Watts every day but “we generate only 12,000 to 13,000 Mega Watts”. Gilani said the installed capacity was not being fully utilized, since the cost of generation on the thermal side, two-third of the total generation, was Rs 2 per unit higher than the charged tariff. He said the government was contributing, although unwillingly, to finance these cost differentials through borrowing.
