Home Latest News Ishaq Dar Reiterates Denial of Pakistan Defaulting

Ishaq Dar Reiterates Denial of Pakistan Defaulting

In wide-ranging press conference, finance minister reiterates criticism of PTI government, claims IMF deal will be finalized ‘soon’

by Staff Report

Finance Minister Ishaq Dar addresses press conference in Islamabad

Reiterating denials of Pakistan facing default, Finance Minister Ishaq Dar on Friday claimed that negotiations with the International Monetary Fund (IMF) were nearing completion and the lender will help the country fill an external financing gap of $5-$7 billion for the current fiscal year.

“The last unusual prior action about a power surcharge for the next year had also been completed,” he said, while summarizing the measures already taken by the government to fulfill the IMF’s demands and revive the stalled bailout. However, he admitted that the IMF believed the financing gap would be on the higher side at $7 billion, while Islamabad had estimated it at $5 billion.

Noting that China had already renewed a facility under which Pakistan expected inflows of $500 million in the “next few days,” he said the country’s foreign exchange reserves were also improving, climbing from $2.8 billion to $3.8 billion in the past week despite the government repaying $6.5 billion of foreign debt. “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, adding the aim was to reduce “debt stock.”

The ICBC, he said, had renewed a $1.3 billion loan facility, which would be provided to Pakistan 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,” he said.

PTI’s policies

Referring to recent statements by Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan criticizing the prevailing economic situation, Dar claimed this was damaging the national interest and appeared to be an attempt to sabotage the IMF deal. “Khan’s attitude is selfish,” he said, stressing that despite “malicious rumors,” Pakistan had never defaulted in the past, nor would it do so in future.

Reiterating his claims of the prevailing economic crisis resulting from unprecedented floods—rehabilitation of which requires $16 billion, with more than half pledged during a donors’ conference in Geneva earlier this year—as well as global trends, he sought to blame the nearly four years of the PTI’s government with the 11 months of the PDM-led government. Alleging that the former government had tried to “destroy the country,” he said the numbers “proved” who was more sincere with the country.

“Mismanagement and bad governance of the previous government has brought Pakistan to this point,” he said. “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,” he claimed, while maintaining that Pakistan would escape this “economic quagmire.”

Describing Khan’s actions as “third-rate politics,” he said it was injustice with the nation and the country. “There is no need for a financial emergency,” he claimed, maintaining the government would manage the widening budget deficit.

Admitting that the rupee had depreciated by over Rs. 20 per dollar in the past two days before appreciating by Rs. 7-8 on Friday, he said this was a matter for the State Bank of Pakistan (SBP), which had been made independent by the PTI under the IMF program signed in 2019. “When you have signed an agreement and changed the law, you have to respect it,” he said.

He claimed the central bank and customs officials had tracked the smuggling of dollars in large quantities and there were incidents where smuggling of commodities like wheat and fertilizers had been replaced by foreign exchange. Alleging that a security agency had found $2 billion being transported from Karachi to Peshawar annually, he said the government was looking into ways to control the smuggling with the support of relevant stakeholders.

General elections

To a question, the finance minister outlined the issues with Punjab and Khyber-Pakhtunkhwa proceeding to elections apart from the rest of the country, while stressing that he was in favor of elections. Referring to the Supreme Court’s suo motu ruling directing elections in the two provinces within 90 days, he said there were concerns over whether it was a split decision of 3-2 or 4-3.

“This is a very serious question,” he said, adding that it was not unique for polls to exceed the deadline. Recalling it had happened thrice before—after the assassination of former prime minister Benazir Bhutto, 2010 floods, and 2005 earthquakes—he said: “Substantial funds and security personnel have been deployed to the national census. Is it possible to hold elections in half the country under the previous census and half under another census?” he said, noting an additional Rs. 15 billion would be needed for elections in Punjab and KP.

Similarly, he pointed out that it would be difficult to ensure a neutral setup in Punjab and KP when governments had already been formed in the provinces, adding this would become a recurring problem, as Punjab and KP would remain out of sync with the rest of the country. In the face of such crises, he said, adjusting the election schedule by two to three months should not be a big issue.

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