Coalition govt was handed over an economy which was ‘in a shambles’: Ishaq Dar
ISLAMABAD, Mar 09 (SABAH): Minister for Finance and Revenue Senator Mohammad Ishaq Dar has expressed the hope that Pakistan will sign staff level agreement with IMF in next few days.
He was addressing a seminar on “Reviving economic stability through strengthening of Public Financial Management” in Islamabad on Thursday.
The Finance Minister said in past only PML-N government completed IMF program successfully. He said process of preparing economic and fiscal frameworks for fiscal year 2023-24 will start very soon.
Ishaq Dar said given the challenges presented by the current economic situation the upcoming budget will be a step in taking the country out of the economic quagmire.
He urged the participants to actively deliberate on major economic challenges and come up with policy recommendations and solutions for reviving economy.
The Finance Minister said Pakistan faced similar economic challenges in the past but we took the country out of the crisis. He said economic mismanagement in last few years has completely reversed the progress which country made in 2013-18.
Ishaq Dar said during 2016-17 Pakistan’s economy was ranked 24th in the world. He said imprudent policies of the last government pushed Pakistan into political crisis adding due to PTI’s policies foreign direct investment was reduced.
The Finance Minister said Prime Minister Shehbaz Sharif has recently announced austerity measures which will be adopted to control country expenditures.
He said that the government will welcome any suggestions from all political parties for a charter of economy.
Ishaq Dar appreciated Pakistan’s developing partners including World Bank and Asian Development Bank.
Ishaq Dar vowed that he and his team were “absolutely committed” to completing the current $7bn Extended Fund Facility programme with the International Monetary Fund (IMF), once again stressing that Pakistan was close to signing the staff-level agreement.
Ishaq Dar said: “I and my team have decided that, in a short period of time, we will implement and we will discharge all the sovereign commitments that the previous government had made.”
He recalled that the coalition government was handed over an economy which was “in a shambles”.
“To top it [off], the previous government had agreed to a loan facility which was extended by the IMF. But instead of honouring the commitments, they reversed some conditionalities before leaving office. This led to a serious trust deficit [between the lender and Pakistan],” he highlighted.
However, the minister went on to say, the government had realised that these obligations were not made by an individual but by the sovereign state of Pakistan and decided to honour the commitments.
“We have been in the process of the 9th review which has taken longer than it should have […] we seem to be very close to signing the staff-level agreement, hopefully in the next two days,” Ishaq Dar added.
The agreement with the IMF on the completion of the ninth review of a $7bn loan programme — which has been delayed since late last year over a policy framework — would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.
The finance minister said that Pakistan was going through a rough patch today and it was important for everyone to contribute to overcoming these challenges.
“As they say, charity begins at home and the prime minister has, therefore, announced an austerity package,” he stated and then elaborated on some of its salient features.
Ishaq Dar said that these measures had already been implemented and notified to the Finance Ministry.
The minister further said that Pakistan’s economic difficulties were compounded by the devastating 2022 floods, which affected 33 billion people and caused physical and economic losses of nearly $30bn.
“But despite the fiscal constraints and limitations, the federal and provincial governments have jointly allocated Rs452bn for relief and rehabilitation work of flood affectees.
“If need be, we will together provide more resources to our brothers and sisters in need,” he promised, adding that international agencies had calculated that around $16bn would be required for the reconstruction and rehabilitation work in Pakistan in the next two years.
“At the Geneva conference, we had already announced that half of this bill will be met by Pakistan from its own resources — which is $8bn or Rs3,200bn. And we have done work on this,” Dar said.
The minister also said that it was unfortunate that “petty politics” was being played in Pakistan, even when the country was surrounded by multiple crises.
“This persistent fake propaganda regarding the country defaulting on its international obligations is completely ill-founded and null […] in fact it harms the country,” he maintained.
Ishaq Dar said that he had been appealing to the political parties to sit together and sign a charter of economy, but regretted that it always falls on “deaf ears”.
“Today we are hearing many people talking about the charter of the economy. The government will welcome it […] I think this is something on which we should act apolitical and we should do whatever best we can in the interest of the future economy of Pakistan,” he added.
Ishaq Dar said that the International Monetary Fund (IMF) was “satisfied” with Pakistan’s actions but the staff-level agreement could not be signed this week.
“We seem to be very close to signing the staff-level agreement hopefully in the next few days,” Ishaq Dar said.
While berating the Imran Khan-led government, Ishaq Dar shared the situation of the economy when the Pakistan Muslim League-Nawaz (PML-N) government left in 2018.
The minister said that it pained him to see the economy fall to the rank of 47 in 2022 after it was predicted that Pakistan would join G20 by the end of 2030.
The finance czar also highlighted that the Pakistan Stock Exchange’s (PSX) market capitalisation was over $100 billion but dropped to $26 billion in the last few years.
“Another serious issue that we should be pondering about is the debt sustainability of Pakistan,” said the finance minister. He added that it was under $30 trillion in 2018 and has now climbed to $55 trillion in 2022.
“As a consequence, this country which used to have debt servicing of less than $2 trillion per annum in the fiscal year 2016-17 has risen to over $5 trillion,” said Dar.
“I think in the last few years, we should see what mistakes we have made on the economic front and we should try to correct those as soon as possible,” said the finance minister.
Later, to a question by a journalist, the finance minister said the agreement will not be finalised this week. “Staff-level agreement with IMF is unlikely this week,” said the finance minister, adding that the Fund was “satisfied” with the actions taken by Pakistan.
When pressed that he had assured of striking the SLA by this week, Dar responded: “I said a few days, not this week.”