KARACHI: Finance Minister Miftah Ismail said on Tuesday the pressure on the rupee will \u201cvanish\u201d in a couple of weeks.<\/p>\n
In a one-on-one conversation with Mosharraf Zaidi, CEO of advisory services firm Tabadlab, Mr Ismail said the inflows of dollars into Pakistan will soon be higher than the outflow, resulting in a stable exchange rate.<\/p>\n
\u201cNobody is happy with surgery, but sometimes it\u2019s necessary,\u201d he said while defending his policy of import curtailment to reduce the dollar outflow \u2014 a measure that may slow down economic growth and reduce tax collection at the import stage.<\/p>\n
He repeatedly insisted that the fears of a sovereign default were overblown and that the policymakers knew \u201call the balls that (they) have in the air\u201d i.e. expected inflows of the foreign currency in the next quarter or so.<\/p>\n
\u201cThis is what I\u2019m trying to do: moderate our purchases (imports) and not slow down our exports. For two to three months, I\u2019m going to do that. (With every passing) week, I have a greater handle on the foreign currency,\u201d he said.<\/p>\n
The country burned $80 billion last year to buy foreign goods and services while earning only $31bn against its exports. The resulting gap in dollar liquidity has put pressure on the rupee\u2019s value, which has been depreciating against the greenback.<\/p>\n
The rupee lost 1.31 per cent value against the dollar on Tuesday to close at 232.93 in the interbank market. By the end of last week, the local currency had lost 22.7pc since Jan 1 and 10.3pc since July 1.<\/p>\n
Mr Ismail said a policy plan will soon be in place. Imports will go down gradually and exports will be up \u201corganically\u201d within three months, he said.<\/p>\n
\u201cIt\u2019s no fun going to the world, to the International Monetary Fund (IMF), to the Chinese, to the Saudis, asking for money,\u201d he said.<\/p>\n
He said IMF inflows will materialise within weeks as there\u2019s no chance of the Washington-based lender reopening the loan negotiations. \u201cThere\u2019s no prior action that\u2019s left really. The only thing is that they have a vacation for the (IMF) directors from Aug 1 to Aug 15. That\u2019s why the meeting is a little later than I would\u2019ve liked.\u201d<\/p>\n
Mr Ismail defended the idea of raising dollars by letting a \u201cfriendly country\u201d acquire 10-15pc shareholding in state-owned companies with tradeable shares on the stock exchange. He blamed \u201cirresponsible politicians\u201d for scandalising a simple repurchase or repo arrangement that\u2019ll bring in the much-needed dollars in the immediate term to fight the balance-of-payments crisis.<\/p>\n
The government first requested the unnamed friendly country for dollar-denominated deposits to shore up foreign exchange reserves. But it turned down Islamabad\u2019s request, saying the latter never returned the deposits, the finance minister said.<\/p>\n
Subsequently, the friendly country showed willingness to buy shares in listed government-owned entities under a buyback agreement, which will give Islamabad the option \u2014 but not the obligation \u2014 to repurchase the same shareholding after a certain period of time at a 5pc higher rate.<\/p>\n
\u201cThere\u2019s not even (a question of) price discovery,\u201d he said, noting that the friendly country \u201cwants to helps us\u201d and is giving Pakistan \u201ca good deal\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"
KARACHI: Finance Minister Miftah Ismail said on Tuesday the pressure on the rupee will \u201cvanish\u201d in a couple of weeks. In a one-on-one conversation with Mosharraf Zaidi, CEO of advisory services firm Tabadlab, Mr Ismail said the inflows of dollars into Pakistan will soon be higher than the outflow, resulting in a stable exchange rate. […]<\/p>\n","protected":false},"author":2,"featured_media":259116,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[181,2416,2120,722,9867],"class_list":{"0":"post-273877","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-dollar","9":"tag-miftah-ismail","10":"tag-pressure","11":"tag-rupee","12":"tag-vanish"},"yoast_head":"\n