Daily Times

Pakistan is likely to get $4 billion from friendly countries this month to bridge a gap in foreign reserves highlighted by the International Monetary Fund (IMF), Finance Minister Miftah Ismail said, two days after sealing a deal with the lender.

The IMF has reached a staff-level agreement with Pakistan that would pave the way for a disbursement of $1.17 billion. The board is also considering adding $1 billion to a $6 billion programme agreed in 2019. “As per the IMF, there is a $4 billion gap,” the minister, Miftah Ismail, told a news conference in Islamabad, referring to the shortfall in foreign reserves. “We will, God willing, fill this gap in the month of July,” he said. “We think that we will get $1.2 billion in deferred oil payment from a friendly country.” “We think that a foreign country will invest between $1.5 to $2 billion in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and another friendly country will make some deposits.”

Miftah reiterated the firm commitment of the government to bring economic stability, reducing inflation, ending power load shedding as well as building foreign exchange reserves for achieving sustainable, inclusive economic growth and social prosperity in the country. He reaffirmed the government’s resolve to pass on all the benefits gained through declining of petroleum prices in international market, besides taking all possible steps to protect the most vulnerable segments of the society through strengthening social safety nets.

The minister said that tough and unpopular decision taken by the coalition government had helped the country to avert from default, however, he said that strict adherence of fiscal and financial discipline still vital to put the economy on right direction of fast track, sustainable economic development and attaining social prosperity. Soon after receding the price of petroleum products in international market, he said the government had decided to pass on all its benefits to facilitate the common man in the country and it would be continued passing on the relief to address the rising inflationary pressure.

Meanwhile, he said that after the reduction in petroleum prices in local markets, Pakistan Railways and Pakistan International Airline had also announced to reduce their fairs, adding that provincial governments were also directed to take measures to bring down fairs in inter-city and intra-city to facilitate the passengers. About the depreciation of Pak-Rupee against greenback, the minister expressed the hope that it would strengthen soon after the finalization of agreement with International Monetary Fund by current month, besides receiving about $ 4 billion from the some brotherly and friendly countries. The minister said that it was also expected to receive about $6 billion by the multi-lateral lending institutions including Asian development bank, World Bank and Asian Infrastructure Development Bank and others, adding that it would also help to bring the stability in value of rupee. Criticizing the mismanagement and bad governance of Imran Khan-led government, he said that previous government was not only incapable but it was also inefficient and pushed the country on the verge of economic default and social distraction.

He said that during first 3 years of PTI’s government, budget deficit reached to historic high till Rs 3,408 billion as against Rs1,664 billion of total deficit of PML-N’s previous five years tenure. He said that federal development budget cut down from Rs 900 billion to Rs 550 billion that had slowed down the phase of infrastructure development, where as national debt witnessed about 78% increase and it swelled to all time high and reached to Rs44,366 billion. The net debt and liabilities grew by 78% during first three years of PTI government and it was increased from Rs23,665 billion to Rs53,544 billion, he said adding that due to their inefficiencies, country witnessed historic high deficits including budget and free fall of rupee against dollar.

Finance Minister further said that tax to GDP ration also came down and reached to 9% of GDP according to new GDP, adding that the PML-N government had left the the revenue collection ration 11% of GDP. Besides, the PTI government had left historic high trade deficit during its last year of rule that comprising over $48 billion, besides current account deficit was recorded at $17 billion, which again was the highest. He said that delay in decision making process, poor commitments with international lending institution, particularly with IMF also proved disastrous for national economy and pushed it to the verge of default. He said that due to no-rationalization of POL prices as per according to international market, the government was facing Rs120 billion as losses on petroleum products in term of subsidy and Rs 27 billion on electricity tariff. Besides, he said that the government had also paid an amount of Rs1,070 billion during last year, adding, it provided Rs101 billion subsidy on gas, whereas the circular debt increased from Rs1,100 billion to Rs2,500 billion, which was highest in the history.