Conceding before parliamentary panel difficulties in materializing dollar inflows, State Bank of Pakistan Governor Jameel Ahmed said Pakistan was expecting $18 to $20 billion in inflows from multilateral and bilateral creditors in the second half (Jan-June) period of the current fiscal year to overcome persistent liquidity crunch.
During the sessions of the National Assembly Standing Committee on Finance, MNAs from all political parties noted that there were triple rates on exchange rates and recommended establishing a standard rate for the rupee-dollar exchange rate.
“We are facing difficulties in generating dollar inflows but there is no possibility of a default on the external front in the current fiscal year. It will be difficult to generate dollar inflows in the shape of commercial loans and international bonds. We are expecting to generate $18-$20 billion in the second half of the current fiscal year” the State Bank of Pakistan governor informed the Members of the National Standing Committee on Finance at a briefing at the Parliament House on Friday.
The treasury benches’ lawmakers, including PPP MNA Dr. Nafisa Shah and PMLN MNA Ali Pervez Malik, strongly criticized the government’s policies for the failure to materialize dollar inflows, mostly due to the failure of IMF negotiations to conclude the 9th review under the Extended Fund Facility (EFF).
Ali Pervez Malik has warned that the second phase of the impending disaster may result in the private sector looming crises. He believed that the administration was having trouble bringing in dollars because the IMF was using delay strategies rather than the current account deficit, which was no longer the difficult area. He believed that the IMF programme had been paused and that the resumption of the stalled programme came with conditions attached to payments from multilateral and bilateral creditors.
Even the PMLN’s Qaiser Sheikh, chairman of the Standing Committee on Finance, joined the group in criticising the government, saying he could inform them of the situation on the ground, but Ishaq Dar, the minister of finance, the finance secretary, and the chairman of the FBR chose not to show up. He claimed that he had been trying to get in touch with the minister for a few days but had been unsuccessful.
When the members severely criticized the government, Minister of State for Finance and Revenues Dr Aisha Ghaus Pasha said the IMF programme was not suspended and they were engaged with it. Qaiser Sheikh inquired why the government was not talking openly, which triggered a heated debate among the MNAs and Minister of State Aisha Ghaus Pasha who said there was no decision yet on combining the 9th and 10th reviews under the IMF programme.
She said that the country had failed to materialise the much-needed structural reforms in the last 75 years. “Pakistan-IMF negotiations were struck mainly because of living beyond our means since the inception of the country. The energy sector is a major bone of contention where the IMF recommends recovering the cost of generation. The circular debt of the power and gas sector escalated to Rs 4 trillion.
The second reason for the delayed agreement with the IMF is the persistent inability of governments to generate increased tax revenues. Thirdly, the IMF was opposing subsidies and exporters especially textile tycoons of APTMA secured subsidies on power and gas tariffs.” She said that when the government was pursuing structural reforms even traders protested on roads for not paying Rs 3,000 per month fixed tax. “These protesters made structural reforms non-starters in the country,” she added.
Earlier, the SBP governor said that out of total external debt servicing requirements, the government had paid back $6 billion and got a rollover of $4 billion. “The remaining external debt servicing requirements stands at $13 billion,” he said and added that the current account deficit was hovering around $2.8 billion in the first four months and it was projected to touch $10 billion by the end of the current fiscal year.
The SBP had cleared 30,000 Letters of Credit in the amount of $100,000 up until October 31, 2022. He stated that he lacked a precise count of the LCs that were stuck-up, up but that the backlog from the previous two months may now have built up. He said that he will be meeting with the business community the following week to hear suggestions on expediting the clearance of pending LCs. He expressed his displeasure at seeing people holding up LCs.
The chairman of the panel said that raw material-related consignments had got stuck up because of which prices went up by 10pc in the last 30 days.
