$30bn financing needs in FY23: Miftah underscores need for ‘restarting’ IMF programme

ISLAMABAD: While ruling out any immediate respite in inflation, the government said it is important for the country to restart the International Monetary Fund (IMF) programme to meet $30 billion financing needs in the next fiscal year.

This was stated by former finance minister and prospective adviser on finance for Pakistan Muslim League (N), Miftah Ismail during a media talk along with Muhammad Zubair Umar and Musadik Malik, after they were directed by Prime Minister Shehbaz Sharif to place the economic statistics on record.

He said in his opinion previous government’s relief package was inappropriate and may have to be revisited.

He further stated that the government would continue the IMF programme because it would make inflows from other countries easier to meet the financial needs. He said although he has not yet met with the Fund but negotiations with the IMF would be restarted.

Miftah expressed the hope that he would be able to convince the Fund on lenient terms and conditions as the IMF is important for the country’s economy. The former finance minister said that fiscal deficit was recorded at Rs5.6 trillion and if Rs800 billion supplementary grants are added, it would be Rs6,400 billion against budgetary estimate of Rs3,990 billion. He said that of Rs800 billion, the government would have to give Rs220 billion to the SNGPL on account of losses of RLNG or LNG besides Rs80 billion to Gencos.

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Ismail also said that the trade deficit would be touching $45 billion following $75 billion imports and $30 billion export and the current account is projected at $20 billion or 9.1 percent of the GDP by the end of the current fiscal year. He said that foreign exchange reserves have been on decline and there is need to stabilize the forex reserves.

He further maintained that expenditure would be Rs8,700 billion in the ongoing fiscal year and if these Rs800 billion supplementary grants are added then it would touch Rs9,500 billion against the budget estimation of Rs7,500 billion.

He said that the previous government borrowed 80 percent in almost four years as compared to total loans were taken in the last 70 years. He claimed that these figures were shared by the finance secretary with the prime minister’s economic team and former finance minister Shaukat Tarin was aware of these numbers.

He said that the primary deficit is also estimated at Rs1,650 billion as opposed to Rs900 billion for the current fiscal year. He said that the devaluation and increase in policy rate done during the last government led to increase in inflation and immediate respite would be unlikely, however, the government would take administrative measures to deal with the unnecessary increase.

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He said that soon after the formation of the cabinet, agriculture and business conferences would be convened to benefit from the low hanging fruit in the farm sector.

“We have provided relief in terms of increasing minimum wage to Rs25,000 from Rs22,000 and allowed 10 percent increase in pension,” he said and added that for last two days, there has been an increase in the rupee value against the dollar and the stock market also responded positively. The rupee against the dollar has also decreased to Rs182.3 from Rs190, he added. He said that the previous government has left very serious issues as inflation for poor masses has increased to 19 percent, whereas, rural inflation has also increased. PML-N leader Malik said that the country’s expenditure has increased, whereas, revenue decreased due to the policies pursued by the previous government.

Copyright Business Recorder, 2022