Mohammad Ishaq Dar, Pakistan’s finance minister, stated on Wednesday that the country had avoided defaulting on its debts, albeit at a very high political cost.
I want to use this conference to communicate with markets. There is no need to worry; we are back in business and, with Allah’s help, everything will be set up. Speaking at the All Pakistan Chartered Accountant Conference, the minister assured the audience that there was nothing to worry about.
He said that everyone would be in the clear and that Pakistan “will not default.” The country had been facing tremendous problems, but the current administration had managed to keep it out of default despite incurring a significant political cost.
“If given the choice between the state and politics, the state should take precedence because politics may exist even if there is no country. Where would politics be if there is no county, he questioned.
According to Ishaq Dar, Pakistan will need about $32-34 billion to cover its debts and other expenses for the fiscal year 2022–2023. “These include approximately $12 billion in current account deficit and approximately $22 billion in multilateral debt liabilities.”
To preserve the prestige of the nation, he nevertheless swore that the government will make every effort to uphold the sovereign guarantees.
The minister reiterated the government’s position on the debt repayment plan for the Paris Club. He said that shortly after taking over the finance minister, he made it known that the government would not request loan rescheduling from the Paris Club.
He also denied rumors that bond maturity dates could be extended into December 2022. Pakistan should fulfill its duties on schedule, he claimed, for the sake of its own reputation and integrity as a sovereign nation.
He exhorted chartered accountants to fulfill their responsibility and persuade lawmakers to act in the interests of the country’s economy.
Ishaq Dar claimed that Pakistan was facing significant problems, which had been made worse by the terrible floods. However, he was sure that all would be fixed, just as it had been in 1998–1999 and 2013 when the nation was dealing with comparable issues.
He claimed that during its last term, the Pakistan Muslim League-Nawaz administration had put the economy on a growth path and it was expected that it would overtake Canada and Italy to become the 18th major economy, but this was not possible due to the political interests of some parties.
He regretted that if the political parties had worked together, the nation would have reached its goal of ranking as the 18th major economy by 2026 instead of where it now was at 54th because of political unrest.
He added that he had long supported a “Charter of Economy” that would aid in putting the economy on a course of steady growth.
According to the minister, the PML-N came to power in 2013 at a time when the nation was experiencing significant macroeconomic difficulties, and default was expected within six to seven months.
But, he continued, the government resolved the issues and steered the economy in the direction of expansion. The Consumer Price Index (CPI) based inflation was recorded at 4% and food inflation at 2% at that time, and the world recognized the progress made as the nation’s ratings moved up. The nation had $26 billion in reserves and a stable currency that was equal to about Rs104 in the dollar.
The country would have joined the G20 group and ranked as the 18th major economy if that voyage had been let to continue, according to the minister.
Dar responded to a question by stating that Pakistan was virtually on the FATF’s blacklist in 2013 and that as a result of the efforts of the PML(N) administration at the time, the nation was moved to the grey list in 2014 and subsequently the white list in 2015.
He added that the government was working on his projections to resuscitate the economy: “I had done my projection for the economy and the prime minister is better aware of it.”
He did, however, emphasize that the current administration was attempting to curb inflation by stabilizing macroeconomic indices.
According to the minister, the dollar’s fake appreciation would cause it to fall to its true value below Rs 200.