The Adviser to the Prime Minister on Finance, Shaukat Tarin, said that the interest rates on treasury bills (T-bills) have been manipulated and that commercial banks have blackmailed the government.
Tarin told Dunya News that banks have exploited the government on T-bills and warned that government has the option to cancel open market operations (OMO) of the banks.
While warning institutions, he stated that the government does not wish to halt free-market activities. “Please don’t push us; we have other options,” he remarked.
Tarin also spoke about Pakistan’s progress and how inflationary pressures have rattled the local exchange ledger, and explained that the open market demand for dollars is significant, owing to the uncertain Afghan trade. Uncertainty is driving inflationary pressures and the open market is considerably impacting the interbank market, he said.
While commenting on the incidence of poverty in Pakistan, Tarin insisted that its rate had dropped, and that “we are attempting to avoid putting an undue strain on the lower classes” by making informed decisions and implementing timely reforms for sustainability.
He discussed the issue of tackling Pakistan’s unscrupulous inflationary pressures and stated that the agreement it has reached with the International Monetary Fund has resulted in a decent and beneficial program. He added that core inflation and trade deficits are both big problems and that the government is using all the resources on hand to counteract them.
Tarin said that the notion that prices will rise as a result of the agreement with the global lender is not true. Linking inflation and rising trade deficit, Tarin labeled it ‘imported inflation and said that the rise in the prices of petrol, coal, steel and edible oil in the international market has significantly increased Pakistan’s import bill. The Advisor said that as prices go down in the international market, inflationary pressure and trade deficit will also subside.
Pakistan’s Consumer Price Index-based inflation had a notable increase of 11.53 percent on a year-on-year basis in November 2021 as compared to 9.2 percent in the previous month. Moreover, the trade deficit widened by 162.4 percent during the same period, owing to an almost threefold increase in imports as compared to exports.
