Govt snubs talk of economic emergency

Finance ministry says energy conservation measures under consideration to reduce import bill

ISLAMABAD:

The government ruled out on Tuesday the possibility of imposing an economic emergency in the country to deal with one of the worst crises in its history but said it was contemplating energy conservation measures to reduce the import bill.

In a statement, the finance ministry said that the government remained committed to the International Monetary Fund (IMF) programme and the talks for starting the review under the programme are at an advanced stage.

“A false message on supposed economic emergency proposals has been circulating on social media in recent days. Finance Division not only strongly rebuts the assertions made in the said message but also categorically denies it and that there is no planning to impose economic emergency,” the statement said.

Interestingly, out of the nine points mentioned in the social media message, at least two were already under implementation related to curb on imports, while one about energy conservation was actively under consideration on the advice of the State Bank of Pakistan (SBP).

“The message is unfortunately aimed at creating uncertainty about the economic situation in the country and can only be spread by those who do not want to see Pakistan prosper,” the ministry said, adding that the creation and spread of such false messages was against national interest in these times of economic hardship.

“A mere reading of the nine points mentioned in the message indicates how far-fetched those suggestions are,” according to the finance ministry. “It is also quite inappropriate to equate Pakistan with Sri Lanka, given inherent strength and diversity in Pakistan’s economy,” it added.

Pakistan needs a minimum $32 to $34 billion in the current fiscal year to finance its debt and bridge the current account deficit gap. The foreign inflows in the first four months remained at $4.2 billion.

“The present difficult economic situation is mainly the result of exogenous factors like commodity super-cycle, Russia-Ukraine war, global recession, trade headwinds, Fed’s increase in policy rates and devastation wreaked by unprecedented floods,” according to the ministry.

The government had been making utmost efforts to minimise the impact of such external factors, even when faced with the economic consequences of unprecedented floods and having to meet IMF conditionalities, the statement continued.

The finance ministry said that the government remained committed to completing the IMF programme, while meeting all external debt repayments on time.

“In this challenging economic situation, the government has put in place a number of austerity measures with the approval of the federal cabinet. Such measures are in public knowledge and are aimed at eliminating non-essential expenditures,” said the finance ministry.

Similarly, the statement said, the government had been deliberating energy conservation mainly aimed at reducing the import bill. The energy conservation was the first measure mentioned in the social media message about economic emergency.

Sources said that the SBP was pushing the government to take energy conservation measures, particularly the early closure of markets and saving the fuel cost. The government’s decision to lift ban on certain imports and instead increase regulatory duties had put more pressure on the external sector.

The finance ministry said that deliberations on the energy conservation would continue in the federal cabinet and all decisions would be taken in consultation with all stakeholders and in the best national interest, the statement stressed.

The ministry claimed that the IMF programme had come back on track with the efforts of the current government. It added that “negotiations leading to ninth Review are now at an advanced stage” – a vague term coined to give an impression as if Pakistan and the IMF were in fact negotiating under the ninth review schedule.

The ministry said that the government’s recent efforts had resulted, amongst others, in lower current account deficits in recent months and achievement of the Federal Board of Revenue (FBR)’s revenue targets. “Easing up of pressure on external account is also foreseen in the near future,” it claimed.

“While there remains the need to make structural adjustments in the mid-term, the economic situation of the country is now moving towards stability,” it added.

“Finance Division urges the people of Pakistan to contribute towards economic betterment and stability and not to pay heed to malicious rumour-mongering which is against the national interest of Pakistan.”

Last week, Finance Minister Ishaq Dar said that he did not care if the IMF mission would not come to Pakistan.