LAHORE: Former federal finance minister Shaukat Tarin has said that a steep decline in the value of rupee against the dollar has increased the country’s debt by Rs 4.5 trillion in one day and the depreciation of rupee would bring more inflation in the country.
He expressed these views while addressing a press conference here on Friday. He was flanked by Pakistan Tehreek-e-Insaf (PTI) General Secretary Asad Umar.
Tarin pointed out that in one day the rupee depreciated by Rs 34 against the dollar which shattered the tall claims of Federal Finance Minister Ishaq Dar who had said that “as I boarded the plane the rupee appreciated against the dollar and hence our loans declined by Rs 1200 billion”. “However, under his management, the rupee saw a steep decline in one day,” he added.
He averred that today the dollar was trading at Rs 264 whereas when they left the government, it was trading at Rs 182. “The depreciation of the rupee would bring more inflation in the country”.
He further said that in just two days Pakistan’s loans have inflated by Rs 4.5 trillion. Shaukat Tarin recalled that the PTI government was castigated for augmenting loans by Rs 19 trillion in 40 months and this was also due to the depreciation of the rupee as well; “at that time they (coalition parties) did not see the real cause behind the increase”.
Tarin observed that since the coalition parties have come into government, the loans have increased by over Rs 11 trillion while the country’s foreign exchange reserves have fallen below US $4 billion, which includes the dollars given by Saudi Arabia in the shape of deposits, United Arab Emirates (UAE) and China. “It seems that the country was running on loans,” he added.
Talking about the cause behind the International Monetary Fund (IMF)’s reluctance to resume the programme, the former federal minister said it has an objection over Pakistan’s budgetary problems; “the IMF was saying that our fiscal deficit stands at Rs 3.2 trillion while the government was talking about collecting taxes between Rs 200 and Rs 300 billion. To meet the deficit, the government has to levy more taxes on petrol, diesel, cigarettes and other items, and thus putting more financial burden on the people,” he added.
“Right now, the government is facing a critical situation; if it does not sign an agreement with the IMF, Pakistan would not get the money from the IMF and other countries. The government was holding a meeting with the IMF in a few days and the agreement with the IMF would bring more financial burden in the shape of an increase in the prices of fuel and commodities and more taxes on the people and business community,” he said.
Tarin recalled that the coalition government complained that it inherited a 1.3 trillion-rupee circular debt from the PTI government; “at present, the circular debt was increasing by Rs 123 billion per month and touching Rs 3.2 trillion. “The government was far from meeting the target (relating to circular debt) it gave to the IMF, as it was facing a shortfall of Rs 800 billion.
Hence, it has to enhance the prices of electricity and gas to fill the shortfall. Thus, an electricity unit would jump from Rs 36 per unit to Rs 50 per unit, which was Rs 16 per unit when our government left,” he added. He warned that these severe measures would translate into unprecedented inflation for the common man; “the Sensitive Price Index, which constitutes prices of edible items and electricity, would jump from present 31.75 percent to 45-50 percent while the Consumer Price Index would go up to 30 to 35 percent from the present 25 percent. We would see the cost of living hit the roof in the coming days.”
Tarin warned that the cost of doing business would substantially increase which would put companies/shops/industries facing financial problems out of business, and subsequently, the country would see a rise in unemployment. He contradicted the government’s claim of 1.5 percent economic growth and predicted that the country would see negative growth. “Moreover, the people’s income would decline in real term,” he added.
On this occasion, PTI General Secretary Asad Umar said that in 36 hours, the country’s debt has increased by Rs 45 billion; “What this government has done to Pakistan in the last nine months was never seen in the past”. He pointed out that thousands of businesses in Pakistan have closed down due to the imprudent decisions made by this government and subsequently putting the country’s national security at risk.
Now, the foreign powers would make ‘demands’ in return for their help to bring the country out of the present dangerous situation; this would ultimately compromise the country’s sovereignty and security. The economic meltdown was caused by political turmoil and regime change operation but a question arises as to who is responsible for this,” he added.
Asad Umar averred that right now Pakistan was facing a critical situation which was last seen in 1971. “Today, the country’s most popular leader Imran Khan was being suppressed, putting the country’s security at risk,” he added.
Copyright Business Recorder, 2023