PML-N’s power struggle ruins Pakistan economy
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US dollar at around Rs 224 in interbank. Pakistan’s GDP below one percent, exports and remittances declined, CAD up in October to $570mn, SBP reserves below $8bn.
KARACHI: The US Dollar is hovering at around Rs 224 in the interbank market for last few days, Pakistan’s exports and remittances have declined while Ishaq Dar, who claimed to deal with International Monetary Fund (IMF) soon, failed to bring any good news for Pakistan.
The market sources claimed that the dollar is not available in the open currency market even at Rs 240 to Rs 250.
Former Finance Minister Shaukat Tarin has said at a briefing of Pakistan Tehreek-e-Insaaf Tuesday, “the government including finance minister Ishaq Dar should at least disclose inflows and outflows of the current fiscal year as we need $41 billion to meet the country’s demand.” “Even Ishaq Dar so far could not arranged $6 billion to enhance the reserves as per condition of the IMF.”
He said that the country’s Credit Default Swap is at around 115% today alarming the country’s financial conditions and if the government did not inform the markets about the country’s inflows and outflows, there would be no economic stability in the country.
Few days ago, Ishaq Dar had said Pakistan will not default and would meet its upcoming $1 billion dollar bond payments. “There were rumours that the country would not be able to pay $1 billion on December 5 against the maturity of five-year sukuk, or Islamic bonds.
“We have never defaulted before. We will not even be close to default … Let me clear this categorically that the bond will be paid and there is no delay in this and even arrangements have been made in principal for upcoming payments in the next year,” he said.
On the other hand, Saudi Arab, UAE and China has asked the country that they are ready to support Pakistan but not without the support of IMF. Despite the bailout package of the IMF, no one come forward in last five months and is supporting this government of Prime Minister Shahbaz Sharif.
Statistics released by the state bank shows that Pakistan’s total debt and liabilities peaked, by an unsustainable 24%, to Rs 62.5 trillion at the end of September 2022 – pushing the country into unchartered territory.
According to the State Bank, the total liabilities of the country, mainly government debt, surged by Rs 12 trillion, or 23.7%, compared to a year ago. In Oct 2022, workers’ remittances recorded an inflow of $2.2 billion indicating a 9 percent decrease over last month.
Pakistan’s total reserves held by the State Bank are $7.95 billion on November 11. Meanwhile the Current Account Deficit again started rising to $0.57 billion in October 2022 against $0.36 billion in September 2022.
During Jul-Oct 2022, Current Account Deficit was $2.8 billion (against $5.3 billion) as imports reduced by $2.7 billion (or 11.6%) and exports increased by $0.2 billion (or 2.6%) compared to Jul-Oct 2021.
The central bank did not give the percentage of Pakistan’s total debt and liabilities in terms of size of the economy. The increase in public debt alone, a direct responsibility of the government, was Rs 9.7 trillion in the past year. Gross public debt was recorded at Rs 51.1 trillion by the end of September 2022.
The banks are not receiving dollar as per their need while the central bank limited the Letter of Credits (LCs) in interbank market. The State Bank is not providing dollars for the LCs opening. According to the APTMA, more than 60 per cent textile industries are already closed or at the verge of closing because of liquidity crunch. The government is not releasing its tax refunds on time.
Chairman PTI Imran Khan and his team are continuously demanding from the authorities to conduct general elections as soon as possible but the incumbent government wants to continue its government for next ten months.
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