Finance Minister Miftah Ismail on Tuesday assured that economic crisis in the country has been averted, saying that Pakistan is now heading in the right direction.
In an interview with CNBC, the Pakistan Muslim League-Nawaz (PML-N) leader said that while there were serious concerns about Pakistan heading into the same financial crunch as Sri Lanka, “crucial policy amends and austerity measures” have now stabilised the situation.
Finance minister of Pakistan @MiftahIsmail said there were serious worries about Pakistan heading the way of Sri Lanka and getting into a “default-like situation,” but that seems to have been averted after significant changes were made. pic.twitter.com/dZ0ZtSgm2b
— CNBC International (@CNBCi) August 9, 2022
Pakistan had recently been on the borderline of a balance of payment crisis with the foreign currency reserves plummeting to $9.8 billion — barely sufficient for five weeks of imports — and the rupee falling to a record low against the US dollar.
During the interview, Ismail maintained: “There were serious worries about Pakistan heading Sri Lanka’s way, Pakistan getting into a default-like situation but thankfully we have made some significant changes, we’ve brought in significant austerity, belt-tightening [measures] and I think we have averted that situation.”
He said that Pakistan also got “a sigh of relief” from the International Monetary Fund (IMF) deal and is expected to get the board’s approval later this month, adding that without this programme, the country could have defaulted.
Last month, the IMF said that Pakistan will be receiving the $1.17 billion tranche in August after the two had reached a staff-level agreement.
“In the last week, our currency has actually bounced back about seven per cent or so against the US dollar. If we had gone the Sri Lankan way it would have been much worse,” he added.
The minister, however, blamed the increase in inflation in the country on a “challenging environment internationally” as the prices of oil and commodities skyrocketed.
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Last month, during a press conference, Ismail had said that his top priority was to save Pakistan from default as he had predicted an increase in the inflow of foreign currency in the next quarter.
“My number one priority has never been to control inflation or to bring growth. My priority has only been to save Pakistan from default,” he had said.
He had also placed the onus of increases in circular debt on Pakistan Tehreek-e-Insaf’s (PTI) government, saying that it had more than doubled from $1.1 billion to $2.5 billion.
“They [the PTI] did not work on any area. They just kept appearing on the media, on Twitter and making false statements,” the minister had retorted. “Now they ask who is responsible? You are responsible Khan sahib,” he had claimed.