KARACHI: Shaukat Tarin, former Federal Minister for Finance and Revenue, said on Saturday that so far the country has not defaulted on debt and it hoped that the government will avoid loan default by further curtailing the imports.

Addressing a press conference along with Muzzammil Aslam, spokesperson of PTI on Finance & Economy, at Karachi Press Club on Saturday, he said the country is facing a serious crisis and the economy is almost at a standstill as even now the industries are being closed due to shortage of raw material.

However, he said, PTI has a complete plan to overcome the ongoing economic crisis. “Although we are not in government, we will share the details of this plan in the next few days,” he added.

He said that the IMF review is pending as the government has failed to meet the commitment of 4.6 percent fiscal deficit of GDP. The government is short of some Rs 600 to Rs 700 billion despite some 15 percent growth in revenue.

On the energy sector side, the government has some Rs 123 billion shortfalls every month and the IMF is asking to control this. The IMF is also seeking a single exchange rate as presently there are different exchange rates in the market. Interbank rate is Rs 227 and the trading or grey market rate is Rs 265 to the US dollar. The government must take steps for a single exchange rate in the country, he urged.

He said that Pakistan’s collection in the Geneva donors’ conference remained above expectations but majority pledges are loans that will be distributed in the next 3 years. It will be tough for the government to materialize money on time as the federal government will also need to match the funds to get this pledged amount, he added.

“As per the views of renowned economist Atif Mian Pakistan has technically defaulted as it is unable to fulfil the payment commitments like LCs and other airline payment. But on the debt side we are still not defaulted and we should not,” Tarin said.

Dar admits Pakistan in 'tight spot' but 'no chance of default'

He said that delay in LCs payment is directly putting a negative impact on the inflation, and SPI has risen to 31.8 percent. “We believed if the country got the IMF program then inflation will be 35 percent and if not arrived then it will rise to 50 percent,” he added. Tarin said that rising inflation is a matter of concern as it is directly affecting the common man. Wheat flour prices were Rs 65 per kg during the PTI tenure and now it has surged to Rs 160 per kg and the same trend is witnessed in other commodities, he mentioned.

“The government must monitor the prices of commodities on a weekly basis like we did in our tenure. But unfortunately, this government is not monitoring the commodity prices,” he said. He also suggested the government to sit with the provincial governments and make efforts to control the inflation through administrative measures.

Overall foreign inflows are declining of which the foreign exchange crisis is further worsening. Remittances and exports declined by 19 percent and 17 percent, respectively, in December 2022 if compared to previous year.

He urged the government to provide foreign exchange to the people as per their demand to restore the confidence. “Hundreds of containers of pulses, onions and other commodities are stuck at ports due to non-payment. SBP should immediately release the payments for LCs to control the inflation through an improved supply chain,” he said.

Muzzammil Aslam; however, said that Dubai and Saudi Arabia have pledged $1 billion, which is welcomed but the question remains will they be enough to rescue them from the current situation. “We think it barely covers the payments and will not be enough to address the issue,” he added.

He said that wheat, urea and ghee management in PTI time is exceptional. Every week there would be a meeting of the Price Monitoring Committee to oversee the prices and challenges. He said so far the present government is not serious to resolve the inflation issue.

Aslam said that the IMF is a lifeline and needs to be completed immediately, but it will trigger inflation. In December, Ishaq Dar claimed to bring $13 billion into the country, but he failed to materialize this amount. Even home remittances inflows are declining as it was $3 billion in March 2022 and now declined to $2 billion, so we lost $1 billion on account of remittances, he mentioned.

“The government claimed to get $10 billion from the Geneva Conference, while we have to pay $5 billion dollars in the next three months and our foreign exchange reserves stood $4.3 billion”, he said.

Copyright Business Recorder, 2023

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