Miftah sees pressure on the rupee easing over the next 2 weeks – Business
Finance Minister Miftah Ismail on Sunday expressed optimism that the pressure on the rupiah, which has been falling sharply against the dollar in recent weeks, will ease in the next two weeks.
“You are right to say that after August 17 [Punjab by-]polls, the dollar got out of control and appreciated,” he said, responding to a prompt from a reporter at a news conference in Islamabad.
“I really believe – although I don’t speculate in the currency market – but I think the true value of the rupee is much higher than that.”
He said that this month and the month before, the government had to make payments in the billions, which put the local currency under pressure.
However, he added that the pressure on the rupee would end by next month, promising to bring the current account deficit under control.
The minister said he would work to ensure that more dollars are coming into the country every day than are going out.
Ismail said efforts to reduce imports would bear fruit and the value of the dollar would fall, adding that an improvement would be seen in the next two weeks.
“But let’s be honest, nobody knows the market. I can believe that the fundamentals are in my favor, but speculation, feelings also play a part.”
At one point, he also noted that a remaining International Monetary Fund (IMF) condition would be met by tomorrow morning, without specifying which one.
At the start of his press conference, the minister pointed out that the country had seen a reduction in imports of $2.7 billion between June and July.
He said that so far, the Economic Coordination Committee (ECC) has given its approval to lift the import embargo, but the prime minister and the cabinet have yet to give their approval.
“We are removing the ban on most items except vehicles, cellphones and household appliances.” He said the ban on those three items would remain in place “for some time.”
Ismail said the coalition government believed it had saved the country from default.
“We plan to give Pakistan a healthy economy. We are determined to minimize the current account deficit and turn it into a surplus within about a year.”
The minister said the government has managed to curb imports and will make efforts to increase exports over the next two to three months.
“But the big problem of impending default has been solved.”
Ismail falls hard on PTI
During the press conference, the minister harshly criticized the former PTI government and held it responsible for the country’s economic difficulties.
He said the coalition government was not capable of bringing the country to the brink in just three months.
“Those who brought the country to this point were the PTI and Imran Khan.”
He said that in 2018 Pakistan’s debt was around $25 billion. “When we came to power, it had jumped to $44.5 billion. In four and a half years, you’ve increased our debt by $20 billion,” he said, holding the party accountable for ” four consecutive budget deficits”.
He blamed the policies of his predecessor, Shaukat Tarin, and the PTI leader for the growing current account deficit.
“In four years, the PTI could not reach the tax-to-GDP ratio of the PML-N government. We left it at 11.1% and the PTI increased it to 9%. Khan sahab used to say he would raise taxes [collection] but he reduced it every year.”
When you reduce tax collection each year and increase your budget deficit, then you will be in debt, he pointed out.
He added that the previous government had imposed indirect taxes, which forced the coalition government to present a “tough budget” by imposing direct taxes.
He also blamed the PTI government for the increase in circular debt, saying it had risen from $1.1 billion to $2.5 billion during his tenure. The minister said that the head of PTI had not increased the electricity tariff for 1.5 years, which is why consumers were not receiving bills with the fuel adjustment charge for April.
“They didn’t work on any area. Yes, they kept popping up in the media, on Twitter and making false claims […]. They ask who is responsible? You are responsible Khan sahab.”
He said the PTI government violated the agreement reached with the International Monetary Fund (IMF) in November and sold oil and gasoline at a loss. He also noted how Imran granted amnesty to the real estate sector and its “ATMs”.
“Afterwards, he said what harm can a little money laundering do? What harm can break the [IMF] agreement do? What difference does it make if the country is a little lacking? It makes a difference Khan sahab.”
Ismail went on to say that he visited the IMF office a day after taking office because the government was ready to take the necessary steps to save the country, even if it meant damaging their political capital.
The minister said Imran should immediately submit a response in the prohibited financing case. ” What are you afraid of ? […] I have urged the Election Commission of Pakistan to announce the verdict no matter what the Supreme Court does next.”
Addressing Imran harshly, he said: “You talk about an imported government. But is an incompetent government that steals acceptable? Are we somehow less Pakistani than you? You should be ashamed of your statements. “
Ismail’s speech to the media came as Pakistan struggles to avoid an economic crisis as it awaits an IMF bailout.
Islamabad and the IMF reached a staff-level agreement earlier this month to pave the way for the release of a $1.17 billion tranche – but the lender is awaiting approval from its board, which is not should not meet before the end of August.
It also comes amid reports that the army chief has asked the United States to help speed up the liberation with Pakistan facing dwindling foreign exchange reserves and a plummeting currency.
High commodity prices have hit Pakistan hard. The current account deficit soared to more than $17 billion in the past fiscal year from less than $3 billion in the prior period. Reserves have fallen to dangerous levels, covering less than two months of imports.