Federal Minister for Finance and Revenue Miftah Ismail said on Wednesday that Pakistan has successfully averted Sri Lanka-like situation, and the economy of the country was now heading in right direction.
“There were serious worries about Pakistan heading Sri Lanka’s way and Pakistan getting into a default like situation, but thankfully we made some significant changes… I think we averted that situation,” the minister said in an interview with CNBC.
He said that the country was now in International Monetary Fund (IMF) programme while a staff level agreement has already been signed, and approval from the IMF board for release of funds under the Extended Fund Facility (EFF) is expected to be given by end of this month. The minister said the country was headed in a right direction, adding that due to reduction in demand, the interest rates has been increased. The imports have also gone down whereas the Pakistani rupee has appreciated by around 7 percent against dollar during last week.
The minister said that the tough decision and measures taken by the government had affected people of the country, but the government had no other option to save economy from collapsing.
He said the international fuel prices increased while the commodity and edible oil prices also surged, creating challenging environment at international level. He said the Pakistan economy was not in position to absorb the international price-hike shocks and that was why the government had to pass on the price increase to the people to avert Sri Lanka like situation in the country.
The minister said Pakistan was passing through difficult times. However, he expressed the hope that the prices in international market would come down within a couple of months and would help reduce domestic inflation. He said that although the headline inflation was touching 25 percent, but expressed the hope that it would come down as fuel and commodity prices decline, expecting that the inflation would remain around 12 percent. He said that there were imports of $80 billion last year, while the export stood at $31 billion, and remittance $30 billion, showing that the country had deficit of around $20 billion.
To a question about rise in interest rates, the minister said that it was up to the State Bank of Pakistan (SBP) to decide change in markup rates after taking into account several economic indicators. Talking about China Pakistan Economic Corridor (CPEC), Miftah said that it was a flagship project, and Pakistan welcomed other countries including Afghanistan, Iran, Central Asian countries, Saudi Arabia, United Arab Emirates and Oman to joint it.
