Pakistan banks on Saudi Arabia to avert default.
Dar makes a solemn oath that he will raise funds through the sale of assets; he calls the PTI white paper dishonest.
ISLAMABAD:
Finance Minister Ishaq Dar expressed hope on Wednesday for a $3 billion second bailout from Saudi Arabia within days, offering to raise money through the sale of assets to bolster the country’s critically low foreign exchange reserves in what appears to be an alternative to the International Monetary Fund (IMF).
Dar demonstrated his commitment to the IMF programme at a joint press conference with the government’s economic team, but he also emphasised that he would not take any actions that would burden the populace. Dar did not state definitively during the press conference that the National Security Committee (NSC) firmly supported the IMF programme proposal.
Dar gave his longest press conference since October in response to the Pakistan Tehreek-e-(PTI) Insaf’s criticism of the government’s economic performance, along with Planning Minister Ahsan Iqbal, Energy Minister Khurram Dastgir Khan, Economic Affairs Minister Ayaz Sadiq, Information Minister Marriyum Aurangzeb, and State Minister for Finance Aisha Ghaus Pasha.
In response to a query about if there was any specific promise from any foreign country to avert the catastrophe, Dar responded, “God willing, in matters of days, Saudi Arabia will bulk up reserves.” He subsequently disclosed to The Express Tribune that Pakistan would receive $3 billion from the kingdom.
Dar had stated twice in the previous three months that Saudi Arabia will provide $3 billion in cash, the country’s second bailout in the previous calendar year. It is said that the Saudi King is currently considering the topic for his final approval.
The civil-military leadership has discussed the economic situation more than twice in the last week due to the seriousness of the situation, including at the highest level—the NSC.
Dar responded to a query that the National Security Committee’s handout was ambiguous on the IMF topic and focused more on long-term plans, saying “The National Security Committee was happy and there is nothing to worry about.”
The finance minister emphasised that there was agreement that everyone would cooperate to resolve the current situation but did not state definitively that the NSC supported the idea to approach the IMF.
Dar claimed that loan rollovers “are not an exceptional phenomenon” because all countries have the option of rolling over existing debt or borrowing new money to cover it. Dar declared, “We have decided to roll over deposits. He continued by saying that China would soon return $1.2 billion, although he did not specify whether Beijing would also make further loans.
The position of foreign exchange reserves, according to the finance minister, would be “exceptionally favourable compared to where Pakistan is standing today” by June 30.
The finance minister revealed his aim to increase the official foreign exchange reserves in six months and stated, “The government is also working on government-to-government transactions, which include sell-off of assets and sale of shares but it will not happen overnight.”
But for the previous eight months, these policies have been up for discussion. The sale of the two LNG power plants and stock in publicly traded government entities under government-to-government agreements, according to Dar, were the easy pickings.
The government is committed to the IMF programme, according to the finance minister once more. He also noted, in opposition to the IMF’s demands, “We will not take steps that may put burden on the average man.”
The IMF has requested a plan to eliminate an additional Rs500 billion in circular debt, raise energy prices, impose new taxes, allow the rupee to recover its real value, and achieve the primary budget surplus targets, excluding flood-related costs – the conditions that will fuel inflation, which is already at 25%.
Dar claimed that because inflation was so unpleasant, he had three times cut the price of gasoline while maintaining stability for the previous three months. Dar responded to a query regarding the necessary actions for the IMF programme by saying, “Can we impose burden on the nation in these conditions, no we cannot.
To obtain money for flood-related reconstruction, the government will impose a flood levy, according to the finance minister, and will also impose a windfall income tax on institutions that made significant gains through currency manipulation.
Last week, The Express Tribune had claimed that the government would issue a presidential ordinance to carry out these actions. These actions, however, fall short of what the IMF has requested. Dar continued, “I would try my best to finish the second IMF plan since the first was also finished during my previous tenure.
Dar stated that he preferred the IMF programme’s ninth and tenth reviews be combined, but the lender has the right to make the final choice. The government was unable to complete the ninth review session, which ran from July to September, by the end of November. The tenth review for the period of October to December 2022 is now also due.
The finance minister implored, “Default, default, and default mantra should be halted as it is killing Pakistan.” He asserted that the government had everything in place and was covering all costs. The reserves of Pakistan were, according to him, “clean until 2018 and no other country had deposits in Pakistan.” However, China had also invested $1 billion at the time, as opposed to a combined $9 billion today from Saudi Arabia, China, and the United Arab Emirates.
Our top priorities are to stabilise the economy and keep inflation under control, but Dar noted that there are no short cuts and that it will take some time. He said, “The situation is such that the government cannot launch eurobonds.” Imran Khan’s politics, according to him, damaged Pakistan and resulted in a lowering of Pakistan’s credit ratings, which made it difficult to issue the eurobonds.
“As a country, we must reflect. The country was ready to take off in 2016, but Imran’s politics, which had ruined everything over the previous four years, held it back, according to Dar. He roared, “Imran Khan is worse than Yahya Khan.”
The PTI white paper, which was published a day ago, was false, according to the finance minister, and most of its macroeconomic data. He criticised the PTI for “deceiving” the populace with their economic “white paper.”
The PTI document portrayed a bleak image of the economy and claimed that inflation has sharply increased in the nation over the previous eight months. Dar emphasised that the economy was in “better shape” during the Pakistan Muslim League-Nawaz (PML-N) administration than it had been under the PTI’s four-year rule.
Dar claimed that the PTI presentation was biassed, inaccurate, and used false economic figures. The comparisons offered in the white paper, he continued, were flawed and lacking in economic context.
He said that the legacy the new government inherited from the outgoing one had a significant impact on the economy since April 2022, making what the Pakistan Democratic Movement (PDM)-led government received the benchmark for comparison.
However, he continued, this background was absent from the PTI presentation, which also neglected the state of the global economy, the supercycle in commodity prices, the effects of the Russia-Ukraine war, and the devastating floods that had hit the nation. According to him, it was necessary to consider these facts in order to conduct an accurate analysis.
He claimed that Pakistan will be included in the IMF’s prediction that one-third of the world would experience severe recession in 2023. He claimed that the fund had predicted 2.7% GDP growth. Planning Minister Ahsan Iqbal responded to a query by stating that Punjab’s failure to enforce its writ was the reason why prices were skyrocketing.
