Forex reserves to be propelled by ‘friends’: Dar

ISLAMABAD: Finance Minister Ishaq Dar on Wednesday claimed that friendly countries have announced their support which will help improve depleting forex reserves in the country ahead of unveiling the government’s plan to impose flood levy and tax windfall gain on exchange transactions to mobilise additional revenue.

Responding to the Pakistan Tehreek-e-Insaf’s (PTI’s) “White Paper” at a news conference along with Planning Minister Ahsan Iqbal, Power Minister Khurram Dastgir, Economic Affairs Division (EAD) Minister Ayaz Sadiq, Minister for Information Marriyum Aurangzeb, and others, the finance minister termed it “misleading” and termed the PTI’s claim of 1.5 million lost jobs in the textile industry and many more in other industries and professions, “based on perception having no supporting evidence”.

He said the tax numbers for the first half of the fiscal year are also almost final and attributed the shortfall in tax collection in December to the stuck amount of Rs 270-290 billion expected from super tax which has been stayed by a Sindh court after it was moved. He said that the country would not default as support from Saudi Arabia would materialise in days, adding that China would also provide deposits.

Dar said the country’s foreign exchange reserves are projected to be in a much better shape by June 30, 2023. He said that there is no issue in the 9th review and the present government is committed to completing the International Monetary Fund (IMF) programme.

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He said now the IMF has not only sought details of the current quarter but of the next quarters as well and wanted to know how the flood funding of $16 billion would be met and in how much time. Dar said that 100 per cent executive allowance would be available across the board to all employees as a summary has been sent to the prime minister for approval, adding that it would be announced within a day or two.

He acknowledged the government’s inability to tame inflation.

He said talks are being held on a government-to-government basis on the privatisation of the ‘low-hanging fruit’ of LNG plants as well as shares of some entities.

The finance minister said that the PTI claimed that when the Pakistan Muslim League-Nawaz (PML-N) government came to an end in 2018, fiscal deficit was 7.6 percent of the GDP, which is not true as the fiscal deficit was 5.8 percent and not 7.6 percent.

He said that during the PTI government, fiscal deficit increased from Rs 3.7 trillion to Rs 5.5 trillion. Dar said the fact is that in 2019, the PTI increased financial deficit by 7.9 percent while the PML-N had left behind 5.8 percent deficit in the fiscal year 2019. He added the PTI was unable to increase tax collection to Rs8 trillion in a year’s time as was announced by it. The economic growth has gone down to 1.4 percent while inflation has increased by 10.5 percent but these figures are also wrong because the economic growth in FY 2018 was 6.1 percent.

He said that in the fiscal year 2019, growth rate in the PTI’s tenure had fallen to 3.12 percent.

He said during PML-N’s tenure, maximum CPI was 8.6 percent and minimum stood at 2.9 percent while in PTI’s maximum CPI reached 12.2 percent and minimum stood at 6.8 percent, adding that during PML-N’s tenure maximum food inflation was 9.0 percent and minimum stood at 2.1 percent while in PTI’s maximum food inflation reached 13.6 percent and minimum stood at 4.6 percent. He said that when PTI came to power, the policy rate was 7.5 percent and when the PML-N left the government, it was 6.5 percent.

He said the current account deficit saw an increase in 2018 mainly due to 26 percent import of machinery equipment, massive investment in energy projects to eliminate load shedding, and expenditure on account of security requirements.

The finance minister said the GDP growth during PML-N’s tenure ranged from 4.05 to 6.10 percent while growth ranged from -0.94 to 5.97 percent in the PTI’s tenure. GDP, in terms of dollar, he added, increased by $112 billion in PML-N’s tenure while in the PTI’s tenure it increased by only $ 61 billion.

Copyright Business Recorder, 2023