Economy to remain under stress till Sept, says Miftah

Minister attributes rupee improvement ban on luxury imports, ‘market factors’

KARACHI:

Finance Minister Miftah Ismail has said the economy is on right track owing to tough decisions the government took, although the economy will remain under stress till September.

The minister claimed that the entire global economy was under the grip of crises and not just Pakistan, adding that the energy crisis grew in the country on account of indecision during the Covid-19 lockdown, which would even be cheaper than today.

In a press conference after meeting the Karachi Chamber of Commerce and Industry (KCCI), he said after coming to power, the PML-N-led ruling coalition made a decision to procure the gas and that was fuelling the economy today, reiterating that the government will not let Pakistan default.

He noted that although the economy will be hard-pressed till September this year, the government was hopeful about restoring the economy back to health after securing loans from global institutions, such as IMF and friendly countries.

"Till September, you will have to pay your share of tax and I apologise for the difficulties everyone is facing, but my primary objective is to save the country from default," he assured.

He further explained that the government was compelled to take strenuous decisions such as increasing prices only to “rescue” the teetering economy.

The finance minister also flagged the import-based economy of the country as one of the hurdles, saying no country has ever flourished on this model. He cited the examples of China and Japan whose economies grew in volume through exports.

"Nawaz Sharif in his tenure increased electricity generation to manifolds but we could not utilise that energy to grow our exports with that pace. We utilised that additional electricity to illuminate our marriage halls instead," he regretted.

Nonetheless, the finance minister saw the economy heading in the right direction after “prudent policies” and correct steps of the current. Withdrawing subsidies on petroleum products and power was one of those steps, he maintained.

Miftah Ismail also confirmed the news that the United Arab Emirates (UAE) was investing in Pakistan Stock Exchange (PSX), as a gesture to enhance bilateral economic ties.

It is pertinent to mention here that the UAE has indicated its intent to invest $1 billion in Pakistani companies in various economic and investment avenues that would eventually assist Pakistan's economy which is on brink of collapse.

We had borrowed about $450 million from the UAE in around 1996-7 and still have not paid back that is a deplorable fact for us as a nation, he said. We spend this much amount many times on senseless things and activities.

“We need cut our coat according to our cloth,” he said. “We feel ashamed asking for loans from the world.”

‘Market factors, not SBP’

Answering a query about the rupee’s upward trajectory Miftah clarified neither the State Bank of Pakistan (SBP) nor the government directly intervened to strengthen the rupee against the dollar.

After a long free fall, the rupee commenced to regain its value against the US dollar last week or so. This week, the rupee closed at 22.04 after touching the Rs239 against the dollar and analysts showed hope that it would even improve far better when the International Monetary Fund (IMF) will supply the highly-anticipated loan.

The finance minister attributed rupee improvement to their ban on luxury imports as he hinted that the ban would continue for time being as it was in the best interest of Pakistan's economy.

“I do not have anything in my heart against the importers; they import, the government earns duties, however, for the present it is the best course of action to safeguard the economy,” he said.

Miftah Ismail expressed that the current government has set the goal of $3.5 billion of exports this fiscal year.