After Sri Lanka, the economic crisis threatening Pakistan? Country’s finance minister warns of ‘bad days ahead’
Karachi/New Delhi: Even as one of India’s main neighbours, Sri Lanka, continues to struggle with a severe economic crisis, another appears to be falling into the same shadow. Pakistani Finance Minister Miftah Ismail said on Friday the government would continue to limit imports for the next three months as he warned of “bad days” ahead for the cash-strapped country , reported the PTI news agency.Read also – One dead and 14 injured in the explosion of a grenade in Quetta in Baluchistan
Addressing a ceremony at the Pakistan Stock Exchange in Karachi, the minister said the government led by Prime Minister Shehbaz Sharif was suffering because of the economic policies taken by the former Pakistani regime Tehreek-e-Insaf led by Prime Minister ousted minister Imran Khan. “Under the previous Pakistan Muslim League-Nawaz (PML-N) government, the country’s fiscal deficit was $1.6 trillion, and in the past four years under Pakistan’s Tehreek-e-Insaf regime, that figure jumped to $3,500,” Geo said. TV quoted Ismail as saying. Also Read – Meta Shuts Pakistan Hackers Targeting Indian Officials via Honey Trapping and Malware
“No country can grow and be stable with this kind of current account deficit,” he said. “When you increase the budget deficit and you also increase lending by 80%, it has a negative impact on the economy,” he explained. “I will not let imports increase for three months and in the meantime we will come up with a policy. I understand that growth will be reduced a bit but I have no other choice,” the finance minister said as quoted by the Dawn newspaper. Also Read – Mumbai Woman Reunites With Missing Mother After 20 Years In Pakistan Using Social Media
“On track, but could see bad days”
Pakistan’s import bill for the previous fiscal year was $80 billion, while exports stood at $31 billion. He noted that the current government must save the country from a possible default and must take immediate and short-term measures. “Maybe it was reckless in the long run,” he lamented. “We are on the right track, but obviously we could see bad days. If we control our imports for three months, we can increase our exports through various means,” he said.
10 points for this great story about Pakistan’s economy:
- The Pakistani rupee rose 2.15 against the US dollar for the sixth straight session in intraday trading in the interbank market, to hit 224 against the greenback on Friday.
- Since Khan’s ouster in April, Pakistan’s currency has fallen to an all-time low of 240 amid uncertainty over IMF aid.
- Last week, New York-based rating agency S&P Global revised Pakistan’s long-term ratings from “stable” to “negative” due to soaring inflation and tightening global financial conditions.
- Pakistan struck a staff-level deal with the IMF last month, followed by months of deeply unpopular belt-tightening by the government, which took power in April and effectively eliminated fuel and oil subsidies. electricity and introduced new measures to broaden the tax base.
- The new government has cut a series of subsidies to meet demands from global financial institutions, but risks the wrath of an electorate already struggling with the brunt of double-digit inflation.
- Pakistan had hoped for a quick relaunch of the bailout, but the IMF has so far failed to release the much-needed tranche.
- IMF Resident Representative for Pakistan Esther Perez Ruiz, following the staff-level agreement, said earlier this week that the country had fulfilled the last precondition by raising the oil development tax for seventh and eighth journals combined.
- An initial $6 billion bailout was signed by former Prime Minister Imran Khan in 2019 but repeatedly stalled when his government reneged on grant deals and failed to improve ways significant tax collection.
- Pakistan desperately needs the IMF loan. In July, the fund announced that it would increase the value of the bailout from $6 billion to $7 billion if approved by its board of directors, which is generally considered a formality.
- Sharif has repeatedly blamed the former prime minister’s government, alleging that Khan – a former cricket star turned Islamist politician – deliberately breached IMF terms in order to remain popular among his supporters back home.
(Based on PTI entries)