Pakistan’s default risk reaches alarming levels: Miftah

LAHORE: Pakistan Muslim League – Nawaz (PML-N) leader and former federal finance minister Miftah Ismail on Sunday said Pakistan’s default risk has reached a dangerous level, claiming that Pakistan is on the verge of default.

Miftah Ismail, the leader of Muslim League (N), while issuing a message on the social networking website Twitter, wrote that “I don’t know what is the best dollar rate, only the market can determine it.” Imports were $80 billion and exports $31 billion last year, and the No.1 priority of Finance Minister Ishaq Dar shouldn’t be to make imports cheaper & export harder, which is what an appreciated rupee does.”

The former financial czar in his article stated that “even after paying the December Sukuk bonds, the risk of bankruptcy does not lessen. Pakistan Tehreek-e-Insaf (PTI) government did not follow the agreement with the International Monetary Fund (IMF), which is why the risk of default increased.”

Miftah also said that “we cannot take any risks but at the same time we need to make effective strategies for the creditors. National interest should be preferred over political differences. If the government does not take the necessary steps, it will not be in a position to criticize PTI. A major decline of 38% was observed in exports from 2013 to 2018, which was a huge deficit for the current account. Because PTI did not follow IMF’s agreement, the economy faced a massive downfall, we had to take challenging steps and sign a new agreement with them.”

He stressed that failure to comply increases the risk of default.

“We have no margin for error while there is an urgent need for concrete steps to reassure markets and creditors,” he said. National interest should take precedence over political interest. They have no right to criticize PTI if the government does not take the right steps, exports fell by 38% between 2013 and 2018 and the 38% decline in exports led to the second largest current account deficit. PTI’s non-implementation of the IMF agreement caused difficulties for the economy, but we re-signed the agreement with the IMF, which led to difficult decisions. Today there is a large gap between the dollar rate in the open market and interbank and the State Bank informally guides the banks on the exchange rate.

Miftah Ismail further said: “From 13-18 our exports declined by 38pc from 13.5% to 8.5% of GDP & we ran the second-largest current account deficit. The issue was a currency pegged to a dollar that highly subsidised imports & made them surge even as our exports were getting priced out.

 

 

 

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