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'Times have changed now': Experts weigh in as Dar set to make comeback as finance minister

  • Being in IMF programme, there is little room to do 'much' for the economy, say some analysts
Published September 26, 2022
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Ishaq Dar seems set for a comeback to the top seat at the finance ministry as the currency market seemingly factored in his return with a bullish stance on the rupee on Monday.

The appointment adds to the drama in an already volatile political and economic environment where Pakistan, reeling from devastating floods and pursuing reforms indicated by the International Monetary Fund (IMF) programme, is also hoping for debt relief from international creditors and friendly countries.

Miftah Ismail, who ended his second short tenure as finance minister by announcing his verbal resignation on Sunday, clarified that Pakistan was not seeking relief from commercial bondholders, a statement that came after the country's bonds slumped to just half their face value on Friday.

Pakistan default fears spike on report of UN debt suspension advice

While the political atmosphere is likely to get even more tense, with the main opposition Pakistan Tehreek-e-Insaf (PTI) likely to become louder in its chants against the coalition-led government, market experts and analysts say "times have changed" since Dar was last finance minister.

‘Audiotapes’ leave PDM govt twisting in the wind

Dar, a close aide to Pakistan Muslim League-Nawaz (PML-N) supremo Nawaz Sharif, has a reputation of being an advocate of a strong rupee, and comes back to the country as the party moves to secure its vote-bank, which experts say has gotten seemingly alienated due to decades-high inflation figures.

“It's more of a politically-driven move than an economic one,” Saad Khan, Head of Research at IGI Securities, told Business Recorder.

“There is very little room for optimism, as times have actually changed considerably since Dar’s last stint."

The analyst highlighted that commodity prices remain high in the international markets, whereas the country’s foreign exchange reserves are at a very low level.

“Apart from domestic economic issues and political turmoil, international developments too, are not in favour of Pakistan."

Pakistan seeking debt relief from bilateral creditors, not commercial bondholders, says Miftah

For Pakistan, being in an IMF programme, there is “very little room” for Ishaq Dar, he added.

Meanwhile, Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder that Dar's arrival coincides with a crucial time for Pakistan.

“His timing is critical as Pakistan has appealed to international lenders and countries for debt rescheduling, whereas additional inflows are expected in the wake of floods. These developments, if they materialise, would improve dollar inflows and resultantly stabilise the rupee,” he said.

Flood-hit Pakistan should suspend debt repayments, says UN paper

"It is expected that Dar would be better at negotiating these deals," Abbas said.

“Moreover, commodity prices are expected to decline as well, which would bode well for the economy."

On currency depreciation, Abbas said the currency is now under a market-based regime.

"It can only be done through administrative measures as we are now in a market-determined exchange rate regime. Hence, there isn't much room on offer here."

However, administrative measures can be taken, especially pertaining to export proceeds and improving tax collection.

“The tax base needs to be enhanced, especially agriculture tax should be collected. However, I doubt that such a step could be taken by the incumbent setup,” he said.


Comments are closed.

KUKhan Sep 26, 2022 03:16pm
It's amazing and always first for Pakistan, that under trial criminals, officials and ministers are touted as the hope of Pakistan's economic future. We will all pay dearly for supporting these criminals and not calling out their criminal activities of the past.
thumb_up Recommended (0)
Kambo Man Sep 26, 2022 04:50pm
This only happens in Pakistan - what a shame!!!
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Ahmad Sep 27, 2022 08:33am
The Rupee was artificially held strong by bleeding Billions of US$. Imports were subsidized at the expense of exports. How will he make the rupee stronger as SBP has no dollars to supply the market. Any self praising move will create more mayhem and uncertainty in the forex market.
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MalikSaabSays Sep 27, 2022 10:26am
Its his policies that got us in this mess in the first place, with all the high interest non-productive loans that were deliberately made part of CPEC despite reported opposition from local and chinese economists. Now he has returned to finish the job, coming in for the final kill, the last nail in the coffin.
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Ali Khan Sep 27, 2022 05:44pm
Dar feasted on US War against terror money and was able to control the rupee depreciation. There was no skill whatso ever by this guy to encourage growth in industry. In fact, industries complained about the strength of the artificial rupee. His strategy will be take more debt, keep rupee strong, borrow even more and keep this vicious cycle going. PML is 30 years of failed policies with these "budhas" with no vision for the youth of Pakistan and lacking both economic and visionary intellect! Another pooping moment on the people of Pakistan
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Cassim Sep 27, 2022 06:16pm
Will it prove to be the final killer blow by PML N to the Pakistan ...... after they all go abroad to start their live abroad and live happily after. Only time will tell
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