KARACHI : Finance Minister Asad Umar on Saturday claimed that Pakistan’s economy is already on the road to recovery and that the next IMF programme that the government is pursuing will be its last.
Umar made those remarks during a question and answer session following his meeting with a delegation of stockbrokers at the Pakistan Stock Exchange in Karachi.
Following a tumultuous couple of weeks for the bourse, the finance minister had met the traders today to allay their concerns about the market and the economy.
“There is tremendous [room for] growth in the stock market,” Umar told the market representatives but agreed that “measures need to be taken in order to improve the market’s [recent performance]”.
“We will work for the betterment of the capital market and improve the overall atmosphere for investment,” the minister vowed, but stressed that the stock market’s fortunes are directly linked with the economy’s health. “If the economy will grow, the market will grow.”
The finance minister defended his policies aimed at curbing imports, saying: “The country was heading rapidly towards bankruptcy. I have to save 210 million Pakistanis.”
Umar explained that had he not taken swift measures to curb imports, the rupee “would have been devalued by 100 or even 200 per cent instead of just 27 per cent”.
“Right now we have an $18bn deficit and $9bn of debt repayment this year, which brings the total to $27bn … we cannot afford that,” he said. “Of course, segments of the society will have to bear this pain but if I ignore this financing gap then the consequential pain of that will be far greater than that of our current policies.”
“After taking monetary and fiscal measures, in my opinion, our financing gap for this year will be of $12b. That sum we are trying to solve through a package, which will include one-time inflows as well as elements of trade financing.”
“This is a massive gap, we should never have reached this point. Having said that, you will see healthy growth in our exports this year. The first quarter’s data shows that exports are up, imports are down and remittances have grown by 13 per cent ó all the fundamentals are moving in the right direction.”
“Trading is a good thing but we also have to stay within our resources,” the minister said, adding that while he understands the traders’ concerns, he is “more worried about the interests of the 210m Pakistanis”.
The finance minister also observed that some importers “have made substantial sums from devaluation in the past 12 months by selling inventory they had purchased on old prices”.
The finance minister told his audience that while the new policies may seem tough, they have already started mending the economy. “The economy’s fever has started subsiding,” he said.
“Our average monthly current account deficit for May, June and July was S2bn. The numbers for August and September have not been released yet but according to my estimates they should be down to $1bn. This is half of what we used to [incur] and it shows that issues are coming under our control.”`
