Economic crisis worsens in interim govt

ISLAMABAD – Pakistan’s economic situation has further deteriorated during short tenure of the incumbent caretaker government that neither has intervened in the market to stabilise the currency nor increased the foreign exchange reserves.

The country’s economic situation especially external sector is deteriorating due to widening of current account deficit and loan repayment. The financing of current account deficit and loan repayment has pressurised the local currency.

Pakistan rupee has devalued by around Rs 12 since June 1, 2018 when the caretaker government took the charge. Similarly, the country’s foreign exchange reserves are depleted by one billion dollar during the tenure of interim government. However, the ministry of finance has not taken any concrete measure to stabilise the economy in its short period tenure.

“The caretaker government is continuation of the previous PML-N government, which is not serious in resolving economic issues of the country,” said Dr Ashfaque Hasan Khan, eminent economist and former adviser to Ministry of Finance.

The previous government had handled the economy in a way that will force the new government to approach the International Monetary Fund (IMF) for fresh bailout package, he said in a talk with The Nation.

Sources in ministry of finance informed that caretaker Finance Minister Dr Shamshad Akhtar is against in intervening in market to control the currency value. The ministry of finance and State Bank of Pakistan (SBP) had allowed the rupee depreciation, which has recently touched the lowest 130 against the US dollar.

In her maiden press conference she said, “The market should be allowed for self correcting”. Since then, the local currency had weakened by almost Rs12 against the US dollar, which increased the country’s debt by Rs1200 billion.

Similarly, the country’s reserves are declined by one billion dollar. The SBP’s held foreign exchange reserves are decreased to $ 9.06 billion on July 13 as compared to $10.04 billion June 1 when the incumbent caretaker government assumed the charge.

However, no plan has been made that can show how to enhance the country’s foreign exchange reserves. The minister had admitted that Pakistan would honour its commitment about loan repayment, but it would not be that easy.

The caretaker government once again clarified that it would not approach IMF for fresh bailout package. “No formal or informal talks will be held with IMF for new loan programme. The interim government had looked at the option of IMF programme within the federal cabinet and decided that we cannot start negotiations; she said and left the matter for the next government.

It is worth mentioning here that Pakistan’s currency had devalued by around 21 percent since December 2017, as the dollar value has enhanced by Rs22.5.

The sharp rupee depreciation has added over Rs2000 billion in overall debts in last eight months.

 

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