• Tue. Jan 31st, 2023

Pakistan needs another IMF deal: Miftah Ismail

ByRizwan3

Jan 10, 2023 , , , ,


Former finance minister Miftah Ismail. Geo News/File
Former finance minister Miftah Ismail. Geo News/File
  • Miftah wants Pakistan secure another IMF after current one lapses.
  • Also recommens Pakistan hike gas tariffs irrespective of IMF terms. 
  • Says Pakistan can avert default risk with IMF assistance. 

Former finance minister Miftah Ismail believes that Pakistan needs to secure another programme from the International Monetary Fund (IMF) after the current programme concludes.

Pakistan can avert the risk of default if the international lender concedes to resume its current programme, the former finance minister said, speaking to Geo News‘ Shazeb Khanzada in his late night current affairs show on Monday.

He said the risk of default will not subside without IMF support. The rising dollar demand is due to its purchase to hedge against the fear of default.

Ismail said Pakistan got more aid than expected during the Geneva conference and this will allow Pakistan to negotiate more comfortably with the Fund. Furthermore, Saudi Arabia and China can be approached for new loans, he pointed out.

He said the financing gap had increased, but it would automatically shrink. The former finance minister said the gas tariff has not gone up since September 2020. Thus, it is time for industries like fertilizer and cement, as well as rich consumers, to pay higher tariffs, he underlined.

It is indispensable to increase the gas tariff even if the IMF does not stipulate that as a condition, he said.

During the International Conference on Climate Resilient Pakistan in Geneva on Monday, Pakistan secured $10.7 billion in flood assistance pledges, well over a targetted $8 billion, after Prime Minister Shehbaz Sharif launched an $8 billion flood aid appeal, aimed at helping the country overcome the widespread devastation caused by the cataclysmic floods.

Pakistanis are rather investing in dollars than property. The demand for dollar will automatically scale down when the looming threat of default is over.

Most of the country’s woes will vanish, the day the country signs an agreement with the IMF. Every time, the default risk is deferred for four weeks with the inflow of $1 billion, said Miftah, adding that the remittances had fallen by 10 percent. In such a situation, there won’t be any problem if the dollar’s value is appreciated. He remarked that the dollar’s value is artificially stabled at Rs227, while the fair value of dollar is Rs260. “If we reduce the default risk, the rest of the issues will be automatically resolved,” said the former finance minister.

“Gone are the days when we could have obtained new loans. Now, we have to return huge amount to the world,” said Miftah, adding the IMF does give concessions through negotiations. He said that the UAE had pledged $2 billion with IMF board, adding that it was difficult to talk to the IMF without resolving the issue of exchange rate.

The businesses in the country won’t go for the export unless the custom duty is shrunk, said Miftah. He hinted that the country would have to go for another IMF program in June and added that it was better to take new loans than seeking deferment on loan payments from the friendly countries. Pakistan can talk to Saudia Arabia and China for new loans. “I am still a part of PMLN, unless I am asked to leave the party,” said Miftah, adding that he did not have a plan to join any other party.



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