KARACHI: The pledges in Geneva Donor Conference have been made beyond expectations and they would be helpful in negotiations with the IMF.
Former finance minister Miftah Ismail said this while speaking Geo News programme Aaj Shahzeb Khanzada Key Saath on Monday. The looming threat of default will also ebb once IMF approves the next tranche, which will greatly ease many other problems.
Ismail said the financing gap had widened which would be shrunk automatically. The former finance minister said the gas tariff has not gone up since September 2020, adding it is time the industries particularly those of fertilizer and cement besides the rich consumers be made to pay higher tariff.
It is indispensable to increase the gas tariff even if the IMF does not stipulate that as a condition, he said. He said the risk of default will not subside without IMF support. The rising dollar demand is due to its purchase to hedge against the fear of default. Pakistanis are rather investing in dollars than property. The demand for dollar will automatically scale down when the looming threat of default is over.
Most of the country’s woes will vanish, the day the country signs an agreement with the IMF. Every time, the default risk is deferred for four weeks with the inflow of $1 billion, said Miftah, adding that the remittances had fallen by 10 percent. In such a situation, there won’t be any problem if the dollar’s value is appreciated. He remarked that the dollar’s value is artificially stabled at Rs227, while the fair value of dollar is Rs260. “If we reduce the default risk, the rest of the issues will be automatically resolved,” said the former finance minister.
“Gone are the days when we could have obtained new loans. Now, we have to return huge amount to the world,” said Miftah, adding the IMF does give concessions through negotiations. He said that the UAE had pledged $2 billion with IMF board, adding that it was difficult to talk to the IMF without resolving the issue of exchange rate.
The businesses in the country won’t go for the export unless the custom duty is shrunk, said Miftah. He hinted that the country would have to go for another IMF program in June and added that it was better to take new loans than seeking deferment on loan payments from the friendly countries. Pakistan can talk to Saudia Arabia and China for new loans. “I am still a part of PMLN, unless I am asked to leave the party,” said Miftah, adding that he did not have a plan to join any other party.
