Miftah says IMF’s agreement’s violation led to surge in dollar rate

Finance Minister Miftah Ismail has held previous PTI-led government responsible for the current economic crisis in the country, saying that former prime minister Imran Khan-led regime’s “flawed agreement” with the International Monetary Fund (IMF) led to a rise in inflation and depreciation of rupee against US dollar.

“If we get out of the clutches of the agreement Imran Khan inked with IMF, only then the rate of dollar will come down. Reviving the economy that Imran Khan left is not an easy task,” he said in a statement on Friday.

He added that the subsidy on petroleum products announced by the PTI government had put financial pressure on the economy.

Fuel subsidies were estimated at Rs120 billion this month, the minister said, adding that no government can bear the burden of such a large amount of subsidies. If the government does not have money and it still gives subsidy then it has to borrow more, he added.

Pressure on the rupee is mounting due to rising interest rates and Imran Khan-led government borrowed loans worth Rs20,000 billion which is largest ever amount in the country’s history, said Miftah.

Due to this debt, the PML-N-led government came under severe financial pressure and the foreign exchange reserves left by the previous government are only sufficient to pay for only few days of import bill, he added.

Miftah said PTI-led government violated the conditions of the IMF agreement which put the programme on hold.

“We have to renew the IMF agreement. Imran created problems in relations with all countries, including China and Saudi Arabia,” he added.

The Pakistani rupee continued its nosedive against the US dollar on Friday, for the fifth consecutive working day, as it declined by 0.64% (Rs1.23) to a new historical low, reaching Rs193 against the greenback in the inter-bank market.

The domestic currency had closed at Rs191.77 against the global currency a day earlier, according to the State Bank of Pakistan (SBP).

The latest depreciation recorded was followed by the central bank’s report on Thursday that the country’s foreign exchange reserves had depleted to a 22-month low, at $10.3 billion.

The dwindling reserves have continued to weaken the country’s balance of payments, as a result, Pakistan’s ability to import and repay foreign debt has contracted during the past several months. The $10.3 billion reserve has reduced the country’s import cover to less than two-months as compared to the usual three-month import cover.

Pakistan is scheduled to begin talks with the International Monetary Fund (IMF) on May 18 in Doha, as the country’s options to avoid insolvency have been limited after it could not immediately receive any major financial support from its three friendly countries.

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