Sunday, February 05, 2023

‘Things to remain tight’ even after IMF deal, Miftah Ismail warns

Ex-finance minister calls for exploring ways to enhance exports for solving economic woes down the line

Former federal minister for finance and revenue Miftah Ismail addressing a press conference in this undated picture. — AFP/File
Former federal minister for finance and revenue Miftah Ismail addressing a press conference in this undated picture. — AFP/File

  • Miftah sees Pakistan's economy "tight for a while".
  • "For future, we have to figure out way to export more."
  • Miftah rules out polls as solution to economic woes.

Former finance minister Miftah Ismail has predicted that things on the economic front would “remain tight” even if the government manages to secure the International Monetary Fund's (IMF) bailout programme.

Pakistan — with a $350 billion economy — is seeking a crucial instalment of $1.1 billion from the IMF to avoid default.

“Things will be tight for a while but we can get enough loans for now that we will get some room,” Miftah replied to a question asked by during a question and answer session held by the former financial czar on the popular microblogging site, Twitter, on Sunday.

His response came to the question: “If we secure the IMF's tranche, will $1.1 billion be enough to manage economic challenges? In addition, even if we add some more amount from bilateral donors, who are awaiting [the] IMF nod, our reserves will still continue to dwindle because of external payments, then what's the solution?”

The PML-N stalwart, however, said that for the future “we have to figure out a way to export more”.

Pakistan is spiralling deeper into crisis amid a shortage of dollars and accelerating inflation, with reserves falling to a nine-year low.

Finance Minister Ishaq Dar is facing the difficult task of convincing the IMF that the country is ready to implement other tough measures, including raising taxes and gas prices.

However, Prime Minister Shehbaz Sharif earlier today — while addressing the Azad Jammu and Kashmir Legislative Assembly in Muzaffarabad, — again said that the "country is facing substantial financial challenges", with the IMF “combing every book” and reviewing “everything” and “every subsidy” during the ongoing negotiations over the ninth review of the $6.5 billion loan programme.

Miftah — in response to a question regarding the economic damage caused due to the delay in the resumption of the bailout programme  — said that Pakistan lost credibility in the eyes of international players, which is "very costly". 

"Plus we lost a few billion dollars in remittance and exports and in lost loans. And finally, this delay resulted in many factories closing, shortages, etc. So quite a bit of loss," he added.

Replying to another question regarding the general elections in the current economic scenario, Miftah said he doesn't see how the polls can solve the immediate economic problems.

In September last year, Dar replaced Miftah after months of speculation that Pakistan Muslim League-Nawaz supremo Nawaz Sharif and Dar had been unhappy with some of his key decisions, specifically with regard to the fuel price hike.