Pakistani finance minister Miftah Ismail said on Tuesday “serious worries” that Pakistan would end up like Sri Lanka, grappling with its worst economic crisis in decades, had been averted due to “significant” policy changes and austerity measures.
According to Miftah Ismail in an interview with CNBC, Pakistan was recently on the brink of a balance of payments crisis due to the high cost of energy imports.
He insisted that this year saw the Pakistani rupee fall to historic lows against the US dollar, causing the country’s foreign exchange reserves to drop as low as $9.8 billion, which was just enough for five weeks’ worth of imports.
When asked about the country’s high inflation rate, the minister stated that the major causes were the rising prices of commodities such as oil and other raw materials on a global scale.
He, however, said the country is now heading in the right direction.
The finance minister maintained that the coalition government took tough measures to steer the country out of the economic crisis. Miftah Ismail said that the rupee has come back about 7% against the US dollar in the last week.
The measures also, however, increased inflation, with Pakistan’s consumer price index (CPI) rising 21.3 percent in June from a year earlier, the South Asian nation’s highest inflation in 13 years. In May, the CPI was up 13.8 percent on the year.