Why should I resign, asks under-fire finance minister: Pakistan has neither defaulted nor will it in future, says Ishaq Dar

ISLAMABAD: Minister for Finance Ishaq Dar said on Friday that “Pakistan has neither defaulted in the past, nor it will default in future”.

Addressing a news conference here, he denied all reports suggesting that Pakistan could impose a financial emergency, and berated Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) for spreading “fake news” that the country was heading towards default.

“Why should I resign? The country is serving its loans; it has neither defaulted in the past, nor it will default in future,” he added.

Ishaq Dar, however, conceded that Pakistan and the International Monetary Fund (IMF) possessed divergent projections on external financing gap in the range of $2 billion. He explained that seeking confirmation from bilateral friends was not part of ‘prior actions’ from the IMF for striking a staff-level agreement.

“We have exchanged four times the memorandum of economic and financial policies (MEFP) and now everything is completed from our side with the hope to move towards the signing of staff-level agreement.

“There is a need to give credit to the IMF where it’s due as the Fund has promised to help Islamabad for filling its external financing gap,” Dar said.

Flanked by other members of the economic team, the minister cited different reasons including constitutional, past practices, and ongoing population census exercise as well as additional financial costs of Rs15 billion as stumbling blocks in the way of holding general election through a piecemeal approach.

“I am not holding general election, but it is advisable that it should be held once for the whole country. The PDM leadership might take the decision to file a review petition against the recent verdict of the superior judiciary, but there are examples in the past where elections got delayed.

“In the latest scenario, the KP governor made it crystal clear that the elections could not be held because of a security situation, while in Punjab the governor and the Election Commission of Pakistan (ECP) would take a decision. There is a scheme of things where the population census is underway and how elections in two provinces can be held on the basis of the last census while general elections will be held on the basis of the new census.

“If separate elections are going to be held, then an additional Rs15 billion will be required,” he added.

Without directly mentioning the involvement of the establishment, Dar said that those who nurtured Imran Khan’s politics later admitted themselves that if he would have continued at the helm of affairs, it might have caused disintegration of the country.

“My presser today would be a reality check for Imran Khan,” Dar said angrily as the PTI leaders have been calling him out since the rupee plunged to a historic low of 285.09 a day earlier while February’s inflation hit nearly a 50-year high of 31.5%.

Expressing his concerns over Khan’s continuous criticism of the coalition government, he said: “I am unable to understate whether he (Khan) has a problem in his leg or brain.”

Instead of protecting the national interest, PTI’s leadership tried to sabotage the International Monetary Fund deal, Dar said. “Khan’s attitude is selfish.”

Referring to Khan’s remarks about default, the finance minister said that the PTI chairman’s statements “adversely affect” the country’s financial markets and therefore he should keep his mouth shut. The finance minister said Industrial and Commercial Bank of China has confirmed for re-financing of the remaining $1.3 billion loans today through three different instalments of $500 million, $500 million, and $300 million, respectively, adding that China Development Bank had already re-financed $700 million.

The minister said that the IMF projected an external financing gap of $7 billion as they pitched the Current Account Deficit (CAD) on the higher side while his projections stood at $5 billion, indicating there was a divergence of $2 billion on the external gap. He said that the CAD stood at $3.8 billion in the first seven months and there was an indication it would hover around $400 million; so it would go up to $4.2 billion during eight months period of the current fiscal year. Therefore, overall CAD would be standing less than the projected by the IMF.

He said that Pakistan paid back commercial loans to the tune of $5 billion and it was expected that it would be re-financed. He said that Pakistan accomplished all requirements of the World Bank’s programme loan under RISE for getting $950 million within the ongoing financial year.

He said that Pakistan’s external debt reduced from $130 billion to $126 billion as of December 2022, so it declined.

Dwelling upon the massive depreciation of the rupee against the dollar and hiking of policy rate by 300 basis points going up to 20 per cent, he said that the PTI-led government enacted changes in the SBP Amendment Act so the central bank possessed autonomy and ran its affairs without involvement of the Ministry of Finance.

Ishaq Dar made a comparison of macroeconomic figures between the PTI-led regime from 2017-18 to 2021-22 and stated that the inflation remained in single digits during the tenure of the PMLN-led regime from 2013-18, while it went up in the double-digit under the PTI led government. Today’s price-hike was also a direct outcome of the flawed policies, pursued by the PTI during its rule.

He said, “I have been extending warnings that there is no need to undertake extraordinary expenditure beyond our capacity, but no one paid heed. I have cautioned that if fiscal discipline was not observed then we might be “blackmailed”. We can manage the budget deficit because it requires financing in rupees but there is a problem on external account as it requires financing in dollars,” he added. He said that now the institutions were providing all-out support to steer the economy out of the quagmire. “We need introspection to rectify our past mistakes,” he said and added that he had advocated for the signing of Charter of Economy in the last tenure but no one paid heed at that time.