The fresh loan agreement between Pakistan and the International Monetary Fund (IMF) will result in the dismissal of 1.2 million people from their jobs, further rupee devaluation, and increasing inflation, unemployment and create a mess overall for the economy of Pakistan, said Pakistan Tehreek-i-Insaf (PTI) leader Asad Umar.
These are not my personal opinions, I am saying all this as it is written in IMF’s letter of intent of the loan agreement, which reflects the picture of Pakistan’s economy after the release of the fresh loan, said Umar while talking with the Lahore Economic Journalists Association.
The IMF’s technical analysis reveals that the Pakistani rupee is overvalued by 6%, and needs more depreciation for reforms, so in actuality they told the government that rupee devaluation was necessary for the agreement, said Umar. In addition it told the State Bank of Pakistan to purchase some million dollars as they were aware that once SBP started purchasing dollars, the rupee would collapse as the Pakistan foreign exchange market hardly has any depth, he said.
But we were told by the government that Pakistan will further receive loan installments from other banks which would add around $10 billion in our reserves at the end of the year. We are unable to understand that if $10 billion will add in our reserves then why must the SBP purchase dollars, he asked.
The IMF document, he further said, stated that the growth rate without reforms will be 3%, while the government in the budget report says that growth rate would be around 3.4%, and after the above mentioned reforms, the IMF documents said that growth rate would further drop to 2.5% which would lead to the unemployment of 1.2 million people, Umar said. Even a fall of one rupee against dollar costs Rs70 billion to the economy, and the rupee has devalued by up to Rs7, he added.
“On one side, unemployment and inflation is increasing and the rupee is devaluing due to the government’s policy while on the other our stock market is making new highs but only billionaires are benefiting from it and minting money. Both things are connected,” said Umar.
This is the most crucial moment for the economy of Pakistan and we, as an opposition party have the responsibility to tell the public what actually is happening “, he said.
Talking about privatisation, Umar said that privatization may not produce fruitful results every time, sometimes privatisation works and sometimes it fails.
We are not against privatisation of corporations but the government must understand that this is not only an economical issue, it is a political issue too, so they should discuss such things in parliament before to prepare final draft, so the opposition may give some suggestions, he added.
We want to play a positive role for the economic revival of the country, Umar said.
Published in The Express Tribune, September 29th, 2013.