Friday Mar 03, 2023
Amid constant criticism over the current economic turmoil, Federal Minister for Finance and Revenue Ishaq Dar on Friday denied all reports suggesting Pakistan should impose a financial emergency, berating Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) for spreading "fake news" regarding Pakistan heading towards default.
Dar — who was sworn in as the finance minister in September last year — blamed the previous PTI government for pushing the nation of 220 million people on the brink of default; claiming that it was the coalition government that saved the country by prioritising the state over their politics.
The finance minister recalled that when the Pakistan Democratic Movement (PDM) — a multi-party alliance — ousted Khan through a no-confidence motion, the leaders of the coalition government had decided to keep aside all political interests in the wider interest of the state.
“My presser today would be a reality check for Imran Khan,” Dar said angrily as the PTI leaders have been calling him out since the rupee plunged to a historic low of 285.09 a day earlier while February’s inflation hit nearly a 50-year high of 31.5%.
A day earlier, the deposed prime minister took to Twitter to censure the PDM-led government for slaughtering the rupee bringing back his “regime change conspiracy narrative imposed on Pakistanis by former army chief General (retd) Qamar Javed Bajwa".
“Rupee slaughtered — lost over 62% or 110/$ in 11 months of PDM. This has increased public debt alone Rs 14.3 [trillion and] historic 75 [year] high inflation 31.5%,” Khan tweeted.
Expressing his surprise and concerns over Khan’s continuous criticism of the coalition government, he said: “I am unable to understate whether he (Khan) has a problem in his leg or brain.”
Instead of protecting the national interest, PTI’s leadership tried to sabotage the International Monetary Fund (IMF) deal, Dar said. “Khan’s attitude is selfish."
Pakistan is desperately trying to convince the Washington-based lender to release an overdue tranche of $1.1 billion which will open other financial avenues for Pakistan.
Dar — who has served as the finance minister three times in the past — reiterated that Pakistan has neither defaulted in the past nor will it default in the future.
Referring to Khan’s remarks about default, the finance minister said that the PTI chairman’s statements "adversely affect" the country's financial markets.
He, however, admitted that the State Bank of Pakistan’s (SBP) reserves fell below $3 billion.
It should be noted that the liquid foreign reserves held by the country stand at around $9 billion as of February 24 while the net reserves held by commercial banks stand at around $5.5 billion.
The finance minister revealed that China has renewed a facility under which Pakistan expected an additional inflow of $500 million in the “next few days”.
Highlighting the PDM-led government’s economic achievements, Dar said that the foreign exchange reserves held by the SBP climbed to $3.8 billion from $2.8 billion — recorded last month. He maintained that the government returned $6.5 billion of foreign debt during the current fiscal year.
Pakistan has made payments of around $5.5 billion (excluding the $1 billion sukuk payment). These include $2 billion to China Development Bank and ICBC (Industrial and Commercial Bank of China) and $3.5 billion have been given to banks in other countries,” he said.
“Debt is usually rolled over but the debt stock does not reduce. We are reducing debt stock,” he said. “Formalities with ICBC were completed last night. We returned $1.3 billion to it and this facility has been renewed and we will receive the amount back in three tranches.
“We paid back $1.3 billion in three tranches — $500 million, $500 million and $300 million. We will receive it back the same way. Pakistan will get $500 million in two-three days. We might receive it on Monday. Then we will get an additional $500 million in 10 days.”
Commenting on the economic crisis being faced by the country, he said that the unprecedented floods triggered by the above-normal monsoon rains last year causes losses worth over $30 billion.
Pushed to the brink by last year's devastating floods, Pakistan has reserves barely enough for three weeks of essential imports.
The country needed over $16 billion for the rehabilitation of the flood affectees, Dar said, citing a report compiled by the World Bank. He recalled that the country secured flood pledges of more than a targetted $8 billion at the International Conference on Climate Resilient Pakistan in Geneva.
Sharing a numeric comparison of the performance of nearly four years of PTI and almost 11 months of PDM-led government, Dar said that Khan and Co. did everything to “destroy the country”; however, the numbers show who is sincere with the country.
The seasoned politician and chartered accountant stressed that “mismanagement and bad governance of the previous government has brought Pakistan to this point”.
“Flood caused massive losses. Inflation during July 2022 -February 2023 was 26% and in this, the core inflation stood at 19%. The rest is imported inflation. We cannot avoid it due to floods.”
Dar argued that the opposition — the PTI — has not really improved Pakistan’s standing.
“But Pakistan will escape the economic quagmire. We are making repayments to bilateral and multilateral lenders. We have made payments beyond our capacity.”
Terming Khan’s actions “third-rate politics”, he said that it was injustice with the nation and the country.
“There is no need for a financial emergency,” the finance minister said and vowed that the government would succeed to manage the widening budget deficit.
Lauding Prime Minister Shehbaz Sharif’s austerity drive, he reiterated that the government had a roadmap and a comprehensive plan to steer the country out of the economic crisis.