Pakistan has so far managed to avoid fuel shortages despite a sharp rise in energy prices due to the war with Iran, but ongoing attacks on energy infrastructure in Saudi Arabia and other Gulf states pose a serious risk to the economy, the country's Finance Minister Muhammad Aurangzeb said in an interview on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Bangkok. trtworld.com
According to him, Pakistan has already secured sufficient energy supplies until the end of November and is currently planning supplies during the winter months, when household consumption traditionally increases.
“Pakistan has coped well with the initial impact“, said Aurangzeb. “We had no shortages, no queues at gas stations and no public order problems, as we sometimes see in some countries.“
The finance minister indicated that unless there was an “absolutely urgent need“, the government would not buy liquefied natural gas on the spot market. Such supplies are usually significantly more expensive than the quantities agreed in advance.
Energy prices have risen sharply since the start of the US-Israeli war against Iran in February and the subsequent retaliatory actions by Tehran. Additional risks are created by the escalation in Yemen and the Houthi attacks on infrastructure sites in Saudi Arabia, including energy facilities and airports.
It is precisely the attacks on energy infrastructure that are among Islamabad's main concerns. "What is worrying now is when the energy infrastructure starts to be attacked," Aurangzeb said.
"Honestly, I don't know how far this can go. But one thing is very clear - if the infrastructure continues to be attacked, returning to normality, even if the situation calms down, will take longer," the minister warned.
The risks come at a time when Pakistan is continuing to implement a program with the International Monetary Fund for about $7 billion over three years. In October, the IMF reached an agreement with Islamabad for the disbursement of a tranche of $1.2 billion.
Aurangzeb said the country is already following a policy of fiscal consolidation and is reporting a significant increase in tax revenues. The authorities are also trying to curb tax evasion by companies that collect sales tax from consumers but do not remit it to the state treasury. According to the minister, this amounts to billions of dollars in losses.
He acknowledged that economic reforms are facing resistance from businesses, lobby groups and other stakeholders. “With every reform, with everything you try to do, when you try to change the status quo, there is resistance“, Aurangzeb said. Among the main requirements of the IMF program is the privatization of state assets. Asked about enterprises run by the Pakistani military, the finance minister denied that they receive funding from the state budget. “As far as we are concerned, whatever commercial enterprises they run, they operate independently and are profitable in their own right“, he said. “I can confirm that we are not providing them with funds from the state treasury.“