Photo courtesy PID
Finance Minister Ishaq Dar on Wednesday reiterated claims that Saudi Arabia and China will soon provide financial support to Pakistan that will shore up the country’s depleting foreign exchange reserves and avert the looming threat of default.
“Our foreign exchange reserves by end-June will be much better than you can think,” he claimed during a press conference in Islamabad that also included several federal ministers. Maintaining that the government will complete the ongoing International Monetary Fund (IMF) program, he claimed that after Beijing and Riyadh enhanced their support, the current account deficit would decline to around $3 billion lesser than earlier projections. He said privatization of state-owned entities, especially the sale of LNG plants, would also soon be finalized.
“[Incumbent government] saved the country from default. And with complete conviction, I can say that Pakistan will never default,” he stressed, while snubbing questions related to the risk, which he stressed was “propaganda” being spread by the opposition Pakistan Tehreek-e-Insaf (PTI). “We will repay all the debts and people should not worry about it,” he said. “[The PDM] came into power to save the state, not for mere politics,” he added.
To a question on why the ninth review of the IMF program had been repeatedly delayed, Dar claimed this was because of a “credibility” issue resulting from the PTI’s multiple deviations from the program. He said all requested data had now been provided to the IMF and there were plans for a face-to-face meeting on the sidelines of the donors’ conference in Geneva on Jan. 9.
To a question, the minister said it was unfortunate that a “super tax” due in December—expected to fetch at least Rs. 270 billion—had failed to secure any revenue due to stay orders from courts. “We are in any case planning to beef up revenues and considering a flood levy and a substantial recovery on account of unprecedented foreign exchange windfalls” earned by the banking sector, he said. However, he clarified, no measures would be introduced that would further burden the common man.
As part of this, he said, petroleum prices had been kept stagnant for several months, with some reductions as permitted by the global markets. Admitting that inflation was a major concern for the incumbent government, he said efforts were underway to curtail it in the coming months. He lamented that the country’s economy since the vote of no-confidence in April had been strongly influenced by the legacy that was inherited from the ousted PTI-led government, warning that a third of the global would be facing a serious recession in 2023, and Pakistan was no exception.
Planning Minister Ahsan Iqbal, meanwhile, claimed that a major reason for higher prices of essential commodities was a lack of support from Punjab, adding that devaluation, the PTI’s energy subsidy and global inflation were also to blame.
Dar, meanwhile, said the government was working to ensure economic stability and had cleared several pending letters of credit already. “The government has also opened [letters of credit] for the import industries as well,” he added. He said various agencies were working to counter smuggling of dollars and other commodities like wheat and fertilizer, which have been cited as a major reason for a decline in the foreign exchange reserves by various economy observers.
PTI’s White Paper
At the launch of the press conference, Dar slammed the PTI for its ‘white paper’ on the economy, saying it had given a “dishonest presentation” of the prevailing situation. Reiterating that the economy had been in a “better condition” during the PMLN’s last government—2013-2018—as compared to the PTI’s four years in power, he said it had cherry-picked data to portray a better image for itself.
In its seminar, the PTI had alleged that all economic indicators of Pakistan had worsened in the 8 months since the ruling coalition came into power, adding that inflation showed no signs of declining. To this, the finance minister said their data was flawed, as they had claimed the budget deficit in 2018 was 7.6 percent, when it was actually 5.8 percent.
“During the PTI’s first year in government, the growth rate of the economy was 3.12 percent. In 2018, the inflation was at 4.7 percent and during PTI’s first year, it reached 7.5 percent,” he said, noting the PTI had also increased the interest rate to 13.25 percent in July 2019 and failed to maintain power production, resulting in a return of loadshedding. He also said the PTI had added Rs. 19,000 billion to the country’s debt through loans, adding the total debt now stood at Rs. 53,544 billion.
On inflation, he said the PTI’s claims of 100-200 percent price hikes was incorrect, as actual data showed that the price of wheat had risen by 33 percent in the past 8 months; cooking oil 21 percent; masoor pulse 19.5 percent; mash pulse 35 percent; tomatoes 13.7 percent; petrol 47 percent; and vegetable ghee by 14.9 percent.
He also rubbished the PTI’s claim of creating 5.5 million jobs, saying official data showed the actual figure was 3.2 million between 2019 and 2022. On the PTI’s claims of revenue collection, he said the PMLN had increased it from Rs. 1.938 trillion to Rs. 3.844 trillion, which the PTI had reduced to Rs. 3.829 trillion in its first year, before reaching Rs. 6.1 trillion in its last year.