News Analysis |
In blistering remarks at the first public appearance since his indictment on corruption charges, Finance Minister Ishaq Dar tried on Monday to dispel the impression that the country is facing an economic emergency and will need to return to the International Monetary Fund (IMF) soon because of depleting foreign exchange reserves.
He said the overall budget deficit fell to Rs324bn in July-September against Rs438bn a year ago. He said it stood at 0.9pc compared to 1.3pc last year. Mr. Dar admitted that net domestic debt increased to 61.6pc of GDP in June from 60.2pc in 2013. Mr. Dar attributed the growth in debt to three main factors: an increase in the security cost, expanding social safety nets and high expenditures on energy-related projects.
All in all the press conference looked more like a defense of Ishaq Dar’s performance as a federal minister rather than a commentary on the economic affairs of Pakistan
He highlighted the economic performance recorded during the last four years, especially indicators from the first quarter of the current fiscal year. He said circular debt stands at Rs 390bn despite a substantial reduction in the hours of load shedding. It was Rs 480bn when the PML-N took power. He said the revenue collection witnessed a year-on-year growth of 20pc to Rs765bn in July-September.
Read more: Ishaq Dar must resign for the sake of democracy
Pakistan’s economy which once had gone into full gear in 2014 suddenly seemed to have faced a stumbling block in recent years. Gross foreign exchange reserves worth three months of import cover are facing uncertainty due to foreign exchange earnings and rising foreign exchange liabilities. The declines in reserves have been affected by the shrinking exports alongside a huge increase in imports.
Dar’s policies seemed to be based on using IMF finances to bolster activities in Pakistan that largely revolved around eye-catching but heavily subsidized projects like the Metro bus service
A large number of commentators put the blame squarely on Ishaq Dar’s shoulders. Dar who had been Finance minister since the May 2013 elections was the one who encircled Pakistan in an IMF debt trap while implementing flawed economic policies. Dar already facing a trial on corruption charges in a NAB court is now facing the prospect of being held responsible for the economic decline of Pakistan.
Dar’s policies seemed to be based on using IMF finances to bolster activities in Pakistan that largely revolved around eye-catching but heavily subsidized projects like the Metro bus service. Dar tried to defend himself by heaping blame on the adverse security situation that had driven up costs while trying to highlight the improved security situation.
Read more: Ishaq Dar indicted on Corruption Charges: Who will be Pakistan’s new…
A large number of commentators put the blame squarely on Ishaq Dar’s shoulders. Dar who had been Finance minister since the May 2013 elections was the one who encircled Pakistan in an IMF debt trap while implementing flawed economic policies
He also at the same time heaped praise on the military whose chief had recently brought up the critical economic situation in his speech. He attributed the costs to be the price for a safer secure Pakistan with his statement “there is a cost for this, and countries pay this cost, and we are paying it”. He also complained that the end of the CSF had put an additional burden.
He tried to bring up the silver lining of his current tenure by claiming to have brought download shedding “to two hours a day from a peak of 18 hours a day”. The reduction of the circular debt from 480 to 390 bn Rs was also used in his press conference. He also brushed aside the World Bank report that put Pakistan’s external debt servicing obligations at $31bn in the current fiscal year, by claiming that the global institution has admitted to the finance secretary that it had “misinterpreted the economic data of Pakistan”.
Read more: Ishaq Dar trying desperately to land in Washington
He brought up the improvement of ranking by global financial institutes such as the MSCI Emerging Markets. He, however, did not bring up the removal of Pakistan from its status as an “emerging market” by T. Rowe Price. All in all the press conference looked more like a defense of Ishaq Dar’s performance as a federal minister rather than a commentary on the economic affairs of Pakistan.