Pakistan won’t default, says Ishaq Dar

ISLAMABAD: Federal Minister for Finance Ishaq Dar has said that Pakistan’s economy should not have reached the stage where it stood now. He added that he could not be held responsible for this situation.

“I can prove that Pakistan will not default,” Senator Dar said on Wednesday during a virtual ceremony to mark the first listing of a developmental REIT (Globe Residency REIT) on the Pakistan Stock Exchange.

“We are managing tight position. Now there are not $24 billion foreign exchange reserves which the country possessed in 2016. It was not my fault but it was the fault of the system. Now we must ensure that Pakistan should move ahead. Whether you and I are there or not, Pakistan has a beautiful future,” he added.

He said that the government would complete the IMF programme. It was Pakistan Muslim League-Nawaz (PMLN) that accomplished the Fund programme as even dictators could not fully accomplish such a programme. Regardless of how much difficult conditions had been agreed by the previous government, it was our commitment and all-out effort will be put to accomplish the IMF programme.

“We are delivering on sovereign commitments,” he said and added: “Pakistani nation should not be made hostage. It’s my endeavour not to burden the people anymore through petroleum price surge. We had delivered on the Petroleum Development Levy commitment. Pakistan’s 70 to 80 percent people cannot afford increased POL prices every fortnight, so the government is trying to manage the situation.”

He said that there was no magic wand but he was trying to bring an improvement on all fronts of the economy. “I don’t know who those people are working for by spreading default rumours,” he said and added that all arrangements were in place for repayment on all external loans and liabilities.

The minister said that everyone would have to make commitment to steer the economy out of the crisis mode. He admitted that the country had plunged into a serious crisis but it did not mean that the country could not come out of the existing difficult economic patch. He said that the “business as usual approach” would not work and they would have to manage the difficult situation.

“There is need for introspection. Adventures and bad experiments should not be repeated due to which the country is passing through a difficult phase. I always believe that Pakistan possess beautiful future.”

He said that the external account was facing a challenging situation and they were managing the situation and it would be improved by end of the current fiscal year.

He said that there was repeated rhetoric that Pakistan would not pay its bond of $1 billion but it was paid well on time. Now pseudo intellectuals were again talking of default and termed that all those elements were responsible for sliding the country into such bad situation.

“Please don’t listen to them and disseminate information that Pakistan will not default,” said the minister and reiterated that he could prove that Pakistan would not default at all.

He said that it was problematic that for sake of petty politics and minor objectives, the pseudo intellectuals were causing harm to the country. Pakistan’s debt-to-GDP ratio stood at 72 percent against 62 percent when they left it in 2017, he said and added in the same breath that the debt to GDP ratio of USA was 110 percent and Japan’s 257 percent and UK’s 101 percent.

He said that he could cite a dozen of developed countries where the debt to GDP ratio was over 100 percent but no one there was talking about increased risk of default or debt trap.

“It’s unfortunate that we are worst enemies of ourselves. There is a role of top businessmen for being part of premium club that you should allocate some time for the country and share the true picture of our economy. This country will live long,” he said and added that otherwise he would not have taken responsibility the fourth time as minister of the country.

He said when he took over three months back, he made it clear that Pakistan would not go into Paris Club for rescheduling of debt as the country could get relief of $1.2 to $1.5 billion but the country required to manage $32 billion. Then secondly the bond payment was under consideration for forced majeure. It was matter of the country’s credibility, so the country paid bond repayment well on time, he added.

He said that he in consultation with the SBP governor re-prioritised the imports and the central bank also issued a circular to this effect. He said that Pakistan possessed potential but it were own mistakes due to which the country plunged into the crisis mode.

He said that the dollar smuggling to the neighbouring country continued and secondly the country was importing wheat, which was being smuggled out. Thirdly, urea is heavily subsidised, which is being smuggled out from Pakistan. He has instructed law enforcement agencies to curb smuggling of these three items. “It’s similar to ensuring defence of the country.”

He admitted that interest rate was high in Pakistan. He said that the SBP enjoyed autonomy and added that import-induced inflation played havoc with the prices and exchange rate also contributed to it. If the exchange rate stood at Rs150 against Dollar, then the prices would have declined by 25 to 30 percent.

All those games or adventures which were done with the country were responsible for the mess, he said and added that he could not be held responsible for this situation. “All the mess is correctable provided everyone resolves to take the country ahead.”

According to official statement issued by Ministry of Finance, besides the federal minister for finance and revenue, Dr Shamshad Akhtar, chairperson Pakistan Stock Exchange, Farrukh H Khan, CEO Pakistan Stock Exchange, Akif Saeed, Chairman SECP and Arif Habib, Chairman Arif Habib Group of Companies participated in the ceremony.

Dar extended felicitations to Arif Habib and his team for their success upon the oversubscription of their REIT. He highlighted the need for consolidating the stock market of the country during the challenging economic circumstances and emphasised the concerned authorities not to let rumours create uncertainty in the capital markets.

He also stressed upon the role of SECP as a contributor to the financial and economic development in Pakistan by restoring and maintaining the confidence of domestic as well as foreign investors.

Appreciating the proposals presented by the SECP chairman for improvements and reforms in corporate sector, the finance minister emphasised the SECP to play its active role as a regulator of corporate sector and further extended his support to the SECP for the economic progress and development of the country.

He assured the participants that Pakistan, despite economic challenges, is destined to progress and develop. He promised to ensure a conducive economic environment to attract more companies and investments in Pakistan and put the country’s economy on a positive trajectory soon.