As the nation continues its struggle to find a way forward, former finance minister Miftah Ismail — without giving a clear time period — warned that the economy would remain deep in the woods for the next few months more.

In an exclusive interview with, the Pakistan Muslim League-Nawaz (PML-N) leaders were asked to comment on Chief of Army Staff Asim Munir’s statement “worst is behind us”, which he gave in a recent meeting with the businessmen, Miftah said in his view the economy is going to be in trouble for the next few months.

Pakistan is relying on funds from the International Monetary Fund (IMF) to avoid defaulting on its international obligations and revive its $350 billion economy. The funds will be crucial to ease widespread shortages, curb record prices and bolster foreign reserves that are now barely enough for over a month’s worth of imports.

“I think this is too long a delay in striking a staff-level agreement even after accepting and implementing every term the IMF has imposed on Pakistan,” he said expressing concerns over the delay.

The former finance minister said that this delay spoke volumes about the IMF’s scanty confidence in our ability to manage the debt effectively, while our friendly countries dragging their feet on making the announcements were only following the international bailout master’s suit.

“I mean obviously, not only there’s a lack of competence, but also a shortage of credibility. Beyond this, Pakistan is in the grip of a political and economic crisis. It is going to be a tough few months for us — but only a few,” Miftah claimed.

‘IMF doesn’t really believe in Pakistan’

The former finance minister  — who managed to revive the stalled IMF last year during his tenure at the Q Block — claimed that the Washington-based lender doesn’t trust Pakistan’s Ministry of Finance.

“In last one and a half years we have three times made sovereign commitments and have then gone back on them…[former finance minister] Hafeez Sheikh made the commitments with the IMF during the release of the fourth, fifth, and sixth reviews when [Pakistan Tehreek-e-Insaf (PTI) Imran Khan was the prime minister and as soon as IMF gives the money, Sheikh gets the axe.

“Shaukat Tarin comes in and tables a budget that has nothing to do with the IMF programme so that was the first time we broke our commitments. Then of course the IMF was not releasing the next tranche. Later, Tarin presented a mini-budget in November [2021] and agreed to a new IMF programme as soon as the money came in February, the Imran Khan government again reduced the prices of petroleum products. At that point, diesel was costing the government over Rs200 per litre and it was selling it for less than Rs150. This was the second time that we broke the commitment.”

Recalling the entire journey, Miftah said that in April he came to power and after much difficulty, Pakistan secured the IMF programme again.

“As soon as the money arrived in September I was fired. Dar sahib comes in and says, no I am going to look IMF in the eye and renegotiate this programme and this and that and keep the dollar at an artificially low rate. Our remittances and exports go through the floor and inflation through the roof. So I don’t see the point of all of this and then we began a third agreement with the IMF.”

“So now the IMF doesn’t really believe in Pakistan, but would you?” the former finance minister cross-questioned this scribe in a tone that reassured his words.

Commenting on the holdup in the IMF programme, Miftah said the finance minister had been saying the government would get the review done in one week for many weeks, but now “he doesn’t even say one week”.

“The issue I think is that the Pakistani government has done all it could and now we needed the friendly foreign countries to fund us so that our external accounts are not in deficit and our external requirement is fulfilled,” he said explaining that the real issue, according to him, was that the “IMF doesn’t trust the finance ministry.”

To win the lender’s support, Pakistan has increased tax rates and energy prices, while it has jacked up the policy rate to 20%, the highest in 25 years. The nation also allowed its anaemic currency to massively depreciate to become one of the worst performers globally.

The trust gap between Pakistan and IMF widened unabated after previous authorities contravened the agreed terms. Meanwhile, amid a dollar crunch, investors have also raised concerns about the nation’s ability to make good on its international debt payment obligations.

The nation needs to repay about $3 billion in dues in upcoming payments until June, while $4 billion is expected to be rolled over.

‘Easy to blame the Afghans’

Shedding light on the currency crisis, the former finance minister — who is a PhD in economics from Wharton School — said it is easy to blame others and “we always like to play this game”.

With the Pakistani rupee exploring new lows, economic experts and financial pundits blamed the smuggling of currency smuggling for mounting pressure on the rupee.

They believe that as the authorities concerned have failed to control the smuggling of US dollars to Afghanistan this has continued to drain Pakistan’s foreign exchange reserves — which crossed the $4 billion mark for the first time after several months in the week ended March 3.

“It’s easy to blame the Afghans, we used to blame the Bengalis first and now we blame the Afghans,” Miftah said sharing his take on the entire situation.

He explained that an Afghan buys US dollars in his own currency — Afghanis, so if you buy the US dollar from Afghanis it doesn’t affect the Pakistani rupee-dollar market. It is just like a Thai citizen buying dollars with baht in Bangkok or an Indonesian citizen buying dollars with rupiah in Jakarta.

The industrialist elaborated that when an Afghan citizen was buying US currency with Pakistani rupees, then you have to ask: “where is he getting the Pakistani rupees from? It turns out that he’s getting the Pakistani rupee because we’re buying coal from them and other products in Pakistani rupees.”

He went on to say that what would Afghans do with the Pakistani rupees? They could either buy goods for Afghanistan, which they do or they would convert this to dollars and buy goods from Iran and other countries.

“So Afghanistan currency rate is not the issue — the issue is that the dollar has only one demand that Pakistanis have, which is the transaction demand for the dollar,” he emphasised.

Elaborating on the types of dollar demand in Pakistan, he said “if he wants to buy imported milk or if an imported car, he will go to a bank and say here are Pakistani rupees, give dollars so he can import these goods asking them to send those dollars to his foreign sellers.” He further added that there was another demand for the dollar that people were hoarding it.

“A capital flight is also going on. Pakistanis are scared of putting their wealth in Pakistani rupees and so they either buy gold or they just dollars — this is why the rupee is under pressure,” he said

“This has nothing to do with the Peshawar market. People who understand economics should know this,” he said in an it-goes-without-saying way — suggesting it stands to reason that it’s the way things work here. 

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