“A friendly Muslim country has confidence in Pakistan and its leadership and deposited $1.5 billion in the PDF,” states the Finance minister. PHOTO: ZAFAR ASLAM/EXPRESS
ISLAMABAD:
In a rare acknowledgement, Finance Minister Ishaq Dar on Wednesday said that a friendly Muslim nation gave $1.5 billion for Pakistan Development Fund (PDF) but refrained from disclosing the lender’s name.
“A friendly Muslim country has confidence in Pakistan and its leadership and deposited $1.5 billion in the PDF,” he said.
Speaking at a press conference, an unusually upbeat Dar claimed PDF contributions, actions against exporters who were withholding export receipts abroad and warnings to exchange market speculators – helped recoup the depleted foreign currency reserves to $9.52 billion.
Dar said better foreign currency reserves position strengthened the value of rupee against the US dollar bringing it to a record low of Rs97.90 on Wednesday. “The dollar’s current rate is realistic”, he added.
Highlighting details, Dar said the benefits of a stronger rupee are such that the country’s dollar-denominated external debt has reduced by Rs800 billion ($8.2 billion). This will also translate into reducing prices of electricity and petroleum products that will lower inflation, he added.
Wading through question on PDF, the finance minister said that the fund will be channeled through the State Bank of Pakistan (SBP) to finance mega energy and infrastructure projects initiated by the prime minister.
“The difficult period of getting external inflows is over and the government has added net $2 billion in reserves in last one month”, he announced.
A buoyant Dar also said he was confident that the reserves will cross $10 billion by the end of this month and $16 billion by end of current fiscal year.
With a ring of cautious optimism, the finance minister vowed that in three years the reserves level will be taken up to $20 billion, adding that the present rupee-dollar parity was sustainable as long as the reserves position remained stronger.
Quashing reports, the finance minister maintained that the government did not dump dollars in the market to artificially strengthen the rupee.
People should have confidence on what the government says and it has proven what it said so far, said the finance minister trumpeting his administration’s record.
Taking a swipe at those who criticized the government for its failure to control prices of essential items, Dar said the price of onions, tomatoes and dollars has been brought down to the level when Prime Minister Nawaz Sharif took oath.
During the press conference, Dar also said he would not pursue anyone to resign after the rupee-dollar parity has been brought back to Rs98 a dollar. But it’s the media that was holding him (Sheikh Rashid) accountable for his claim, he added.
In response to Dar’s claim to bring dollar rate below Rs100, Awami Muslim League (AML) chief Sheikh Rashid, had challenged the finance minister and said he would resign, if Dar succeeded in lowering the value of US dollar.
On negotiations with Taliban, the finance minister said that in case talks collapsed, government will provide all financial resources necessary to launch military operation.
Responding to a question, Dar said the United States was bearing the direct cost of war against terrorism through Coalition Support Fund (CSF). But the indirect cost in shape of loss of employment, foreign investment was very difficult to calculate.
“One cannot put a price tag to the cost of war on terrorism but according to one estimate Pakistan has so far sustained $80 billion losses, both direct and indirect”.
He said $1.6 billion CSF dues were outstanding and Washington was expected to release another tranche of $400 million by early April this year.
Published in The Express Tribune, March 13th, 2014.
COMMENTS (25)
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hey
@Xara R: Ha, you missed Sudan. I win.
What is the real story behind a 'friendly' donation of $1.5 billion dollars, Mr. Daar, please do tell what deals you have made with the 'friendly' state......?
A fundamental rule of economics is hat there is no such thing as free lunch. This friendly state had just bought our army men treating them as mercenaries to go and protect Saudi interests in Syria. In Pakistan everything is for sale, our soul, our conscious, our friendships amd our enmity. We are nothing more than just kiraye kay tuttoos.
This PDF sooner or later has to be used for supply side injection. Where are the sustainable processes that will ensure healthy balance of payment equation? What about others accounts in BOP? IT’S a mirage, it just gives a temporary hope. More often than not, it leads to further disappointment.
@nadeem ahmed: @rizwan:
Bye bye IP pipeline. Hello war in Syria.
@Mirza: The u turn on Syria, the promise to not forward on IP pipeline...
If lender is saudi araibia, then this amount shall result in more crises in muslims world.that's sure.
thats saudi family king , they gave this amount with a condition to promote wahabism in pakistan .
An unnamed friendly Muslim country? That's a tricky question which country is that. Bangladesh, Afghanistan, Nigeria or Somalia?
Rentier economies encouraging and supporting other rentier economies.
We were always a beggar nation and we have been taking aids, grants and loans from UAE, Saudia, US, UK etc since ages. so what's wrong in it? If it was taken for the very first time, then I would have some serious concerns. but that's a very usual thing happened and this govt is smart enough to add their foreign currency reserves. This is why no need to talk about khuddari and gairat. :)
A fundamental rule of economics isyhat there is no such thing ad free lunch. This friendly state had just bought our army men treating them as mercenaries to go and protect Saudi interests in Syria. In Pakistan everything is for sale, our soul, our conscious, our friendships amd our enmity. We are nothing more than just kiraye kay tuttoos.
This PDF sooner or later has to be used for supply side injection. Where are the sustainable processes that will ensure healthy balance of payment equation? What about others accounts in BOP? IT'S a mirage, it just gives a temporary hope. More often than not, it leads to further disappointment.
I fail to read a quote by Dar in which he acknowledges, as the article claims, that dollar depreciation is being caused by $1.5 billion in PDF.
I believe it is complex than simply having dollars in the bank (SBP). It also hugely depends on future policies of a government and faith of investors.
Also, rupee has strengthened against almost all major currencies, i.e. EUR, CAD, GBP, AED, etc.
The Only 'friendly' muslim nation is the Saudia Arabia these days. Do our politicians think they can be cryptic and create an aura of mystery around everything?
In today's world of information technology and 'rich versus poor,' it's not too difficult to guess who is the friendly Muslim country. This is nothing but a short term maneuver to prop up an ally and one wonders what are the intonations and undercurrents? Salams
"Deposited" means what? Is it a loan or grant? Does it have to be repaid? The govt is not being very clear on this. Also what is the quid pro quo? Support to Saudi Arabia in anti Syria operations? What exactly is to be done? And who takes care of the Iran blowback if we take an active role in Syria?
Rupee is must be = in Pakistan and India same in worth against Dollar soon/anytime in near future.
The friendly state aka Saudis will inflict a far greater loss in lieu of these dollars by supporting sectarian conflict within the country.
This is a tough one. A "friendly" state with billions to spare? No idea. I give up.
Overall it is confidence of people that is working. People believe that the economy is going in the right direction. . Our economic inicators are working better. Even International bodies are acknoledging that. . If someone is giving us money, even that shows shared interests. A Sri Lankan friend once said: 'US has given Pakistan Nuclear technology'. I said: ' I fully agree. Why don't you go and take it from US as well'.... . If it was only due to less than $2 billion from a friend, Indian rupee wouldn't have seen free fall (India has reserves probably close to $300 billion).
I sure hope there is truth in what he says. Let's see how things turn out in the next few months, only then will the public confidence develop. Immediately rallying behind someone at the first sight of positive action is naive.
A "friendly" state gives us money means that nothing has changed on the ground. What happens when we have spent through the $1.5 bn?