Says default averted but at a very high political cost
ISLAMABAD
Finance Minister Ishaq Dar has expressed the resolve to put the country again on development path by revamping economy. Addressing the All Pakistan Chartered Accountant Conference in Islamabad on Wednesday evening, the Finance Minister said the government is taking measures to stabilize economy.
He said recent floods have adversely affected Pakistan’s economy. He said that the government is considering buying petroleum products from Russia. He said that there is good news for Pakistan but cannot be announced before the FATF’s declaration.
He said the inflation will start coming down in the coming weeks. He said there was a good news for Pakistan but he did not want to reveal the news before the FATF decision that is likely to come day after tomorrow. He urged that there is no need to panic as Pakistan is not going to default.
The finance minister predicted that the value of the US dollar is artificial, it will fall below 200 rupees. “Market should not need to worry, no problem will arise”, added Ishaq Dar. He said that Pakistan will not seek debt restructuring from Paris Club creditor nations. “We will pay the bonds on time,” he said adding that we are not extending the bond maturity.
To a question, he replied if he is not free to make decisions related to the economy, he will not accept this challenge. Ishaq Dar once again gave a clear message that there was no question of Pakistan going into default as the same had been averted, though at a very high political cost.
“I want to give a message to markets through this conference… no need to get nervous, we are back to business, Insha’Allah we will arrange everything. Nothing is to worry,” the minister said.
He said Pakistan would be fine and nobody should have any problem because “Pakistan will not default”. There were serious challenges the country had been facing, however, the incumbent government had rescued it from default although it had to give a very high political cost.
“If there is a choice between state or politics, the priority should be the state and not the politics as if the country is there, there may be politics. If there is no county where there will be politics?” he asked.
Ishaq Dar said Pakistan would require around $32-34 billion to fulfill its liabilities and financial needs for the fiscal year 2022-23. “These include around $22 billion multilateral-level debt liabilities and around $12 billion current account deficit.” He, however, vowed that the government would work hard to fulfill the sovereign guarantees to save the country’s pride.
The minister once again clarified the government’s position about rescheduling of the Paris Club’s debts. He said soon after assuming the charge of finance ministry, he had announced that the government would not approach the Paris Club for rescheduling of loans.
Likewise, he also rejected the speculations about extending bond maturity dates beyond December 2022. Pakistan, he said, was a sovereign country so it should meet its obligations in time for its own credibility and honour. He urged the chartered accountants to play their role and influence politicians to work for the betterment of national economy.
Ishaq Dar said Pakistan had deep challenges which were further increased by the devastating floods. He, however, was confident that everything would be corrected as was done back in 1998-99 and 2013, when the country was facing similar challenges.
He said in its last tenure, the Pakistan Muslim League-Nawaz government had put the economy on growth path and it was predicted that it would be become the 18th big economy, leaving behind Canada and Italy, however, due to political interest of some parties it could not be done.
Had the political parties joined the hands together, the country would have achieved the target of becoming the 18th big economy by 2026, however due to political instability, it now stood at 54th position, he lamented. He had always favoured a ‘Charter of Economy’ that would help put the economy on a sustainable growth path, he remarked.
The minister said the PML-N assumed power in 2013 at a time when the country was facing serious macroeconomic challenges and its was predicted to be going in default in six to seven months. However, the government fixed the problems and took the economy towards growth, he added.
The whole world acknowledged the progress at that time while the country’s ratings went up, the Consumer Price Index (CPI) based inflation was recorded at 4 percent and food inflation at 2 percent. The country had stable currency around Rs104 in parity with dollar and had reserves of around $26 billion.
Had that journey been allowed to continue, the country would have become the member of G20 club and 18th big economy, the minister said.
Earlier, in an interview with international media, he said that talks with the International Monetary Fund (IMF) are progressing well and with ‘positive’ results are expected soon.
Referring to the recent increase in the value of the US dollar, the finance minister said it was not a matter of grave concern and that the real value of the dollar is much lower than the current rate. He also expressed hope that the greenback would fall to its real value.
