Finance Minister and Senator Mohammad Ishaq Dar on Thursday said once again that a staff-level agreement with the International Monetary Fund (IMF) is expected to be inked in the next few days.
Delivering a keynote address at a seminar on ‘Reviving economic stability through strengthening of Public financial management (PFM)’ in Islamabad, Dar said his team remains committed to completing the IMF programme.
“We have been in the process of the ninth review,” he said. “I think it has taken longer than it should have in my opinion, however, we seem to be very close to signing the staff-level agreement hopefully in the next few days,” said Dar.
The finance minister said the actions of the previous government in reversing the conditionalities of the IMF “led to a serious trust deficit between developing partners and Pakistan as a country”.
We are striving hard to revive the economy. Frankly speaking, before I took over the office, from a distance I didn’t know how deep a quagmire we, as a country, were in: Ishaq Dar
The statement from the country’s finance czar comes as Islamabad remains engaged with the IMF for a bailout programme. The IMF mission left Islamabad without inking the staff-level agreement, and instead, issued a short four-paragraph statement, stressing on timely completion of prior conditions to revive the bailout that has been stalled since last year.
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The resumption of the IMF programme is crucial for Pakistan, which is facing a balance of payment crisis. The country’s central bank foreign exchange reserves stand at a mere at $3.81 billion, not enough to cover a month of essential imports.
They are due to get a boost due to a $500-million inflow from the Industrial and Commercial Bank of China (ICBC), but still stand at a critically low level.
On economic challenges
Meanwhile, criticising the opposition, Dar once again dismissed the country’s default rumours, terming them as “ill-founded and malafide”.
“The persistent spread of fake propaganda about Pakistan defaulting on its international financial obligation is completely ill-founded and malafide, which harms the country’s economy,” he said.
Dar said that he has been appealing to all the political parties to sign a ‘Charter of Economy’.
“Unfortunately it all fell on deaf ears and couldn’t be achieved,” he said.
Dar lauded the role of developing partners including the Asian Development Bank (ADB) and World Bank in their support of Pakistan’s economy.
He also said that 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 the current government has inherited.”
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Dar said that Pakistan had faced similar economic challenges in the past, but the government at the time was able to take the country out of those crises “by acting very safely, taking such challenges head on and we came out as a country stronger than before”.
He said the economic mismanagement in the last few years has “completely reversed” the progress that the country had achieved during 2013-18. “It pains me to share that we are ranked 47th global economy in the year 2022, it is something for all of us to reflect on,” he said.
Dar shared that the Foreign Direct Investment (FDI) at present stands at a historic low, blaming “poor governance and economic mismanagement in the last few years”.
He added that Pakistan Stock Exchange (PSX) market capitalisation in the last few years has dropped to $26 billion.
“A loss of $70.74 billion in the last few years,” said Dar, adding that in the last four years, the debt stock has “almost doubled”, creating concerns regarding debt sustainability.
Speaking on the floods that devastated the country, the federal minister said if needed, the government will provide more resources to support affectees. “Around $16 billion will be required for the reconstruction and rehabilitation work in the next few years,” he said.
He said the upcoming budget would place emphasis on “gender needs” and would also be “climate sensitive.”
“We will ensure that such measures are both effective and inclusive,” he said.
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‘Was unaware of economic situation’
In an open admission, Dar said he was unaware of the country’s economic woes before taking charge as the finance minister. Dar took over from fellow party member Dr Miftah Ismail as finance chief at the end of September last year.
“We are striving hard to revive the economy. Frankly speaking, before I took over the office, from a distance I didn’t know how deep a quagmire we, as a country, were in,” he said.
“I have very firm faith that we would come out of this quagmire. It is deeper than before and I would say much more complex than the previous two experiences I had as finance minister,” he added.
Dar said the country’s power sector needs to be structurally reformed and fixed.
Last week, Dar had said the staff-level agreement with IMF is expected to be finalised soon. The finance minister told the media then that negotiations with the IMF are about to end as discussions with the IMF are proceeding positively.