ISLAMABAD: Dr Shamshad Akhtar’s performance as finance minister is “B negative” and her predecessor Ishaq Dar’s is “C negative”.
This assessment was made by Dr Hafiz Pasha while speaking on Paisa Bolta Hai with Anjum Ibrahim on Aaj television.
He said the PML-N’s economic wizard Ishaq Dar, he added, caused a great damage by trying to fix the exchange rate through ‘artificial’ means.
He deplored the way Ishaq Dar maintained two exchange rates and difference between them was Rs 30 at one time; it caused huge loss to the remittances, and reserves were declined to $4.5 billion by June only to cover one-month imports.
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Lamenting the massive rise in borrowing during the ongoing tenure of the Caretakers, Pasha stated that not only issuance of bonds and foreign commercial bank borrowing has dried up but now development banks are not giving money to Pakistan, which indicates an unfavourable external environment for the country.
He observed that Dr Akhtar may have been marginalised and decisions being made on a collective basis.
Pasha further contended that Pakistan needs $5.5 billion from the four development multilateral banks in the current fiscal year but so far has received only a very small percentage of this amount.
Pakistan needs the IMF programme umbrella because Pakistan’s credit worthiness has been very badly affected. Foreign exchange reserves are still very low though they have improved somewhat. At this time, the country is on a standby arrangement (SBA) and before this short-term programme the country was on an Extended Fund Facility, which was suspended due to Ishaq Dar’s violations of key conditions of the agreement. Dar’s policy to fix the rupee value, as he did when he was the finance minister from 2013 to 2017, was flawed from the economic perspective and consequently, by the end of last fiscal year, the rupee touched Rs288 against the dollar.
Dar’s failure to comply with the IMF conditions compelled former Prime Minister Shehbaz Sharif to seek the SBA with the IMF in Paris during Dar’s noticeable absence, Dr Pasha further observed.
Caretaker finance minister Dr Shamshad Akhtar has ensured success of the first review of the SBA, but what is concerning is that December 2023 numbers reveals domestic government borrowing has increased massively and this increase is funding current expenditure as opposed to development expenditure. He said that on net basis it is four times more as opposed to last year, which indicates that monetary expansion would keep on increasing. Pasha said that got for first time Punjab government in deficit.
Pasha stated that there is a possibility that Ishaq Dar would be brought back as finance minister in the event that PML-N led government is established after the elections, which, if he is allowed to make the same economically flawed decisions may make the situation worse in 2024.
Dr Pasha; however, added that Dar may not have the same carte blanche in implementing policies as before and decisions may be taken collectively as is happening during the current set up.
Debt liabilities have to be managed, Pasha stated, adding that unfortunately, the country will have to seek another three-year IMF programme.
Dr Pasha challenged the quarterly estimate of GDP growth: one this is clear that the biggest quarter of a fiscal year is third one and smallest quarter is first quarter of the fiscal year and the difference between the figure of these two quarters is huge of 2 percent, so where is the seasonality he questioned and concluded that the quarterly estimates are highly doubtful. He said that the biggest quarter of a fiscal year is third one and smallest quarter is first quarter of the fiscal year
Pasha said that the rise in the growth during the first quarter of 2023-24 was because of an increase in crop output (cotton and rice) but the industrial sector is negative in the first four months along with some other sectors.
Stock market is an elite’s game and the banking sector is making a huge profits owing to interest rate, Pasha pointed out, adding that this reflects the elite capture of the economy and the elite ensure that policies continue to benefit them.
Copyright Business Recorder, 2024
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