Former Finance Minister Miftah Ismail believes that even if Pakistan receives the $1 billion bailout from the International Monetary Fund (IMF), the default risk will persist.
While talking about the economy at a talk show on Thursday, Miftah lamented that keeping the dollar artificially at 240 was unnecessary, especially given the government’s financial situation.
He said that the IMF’s projections on Pakistan’s current account deficit reaching $8 billion were unfair, adding that friendly countries were upset with Pakistan because it did not follow through on its promises.
Earlier, in response to the rupee’s decline against the dollar, Ismail stated that it was a bad day for Pakistan’s economy because the rupee had fallen close to 300 against the dollar and the interest rate had reached 20%. “When you leave the dollar to the free market on the IMF’s condition, it jumps from 230 till 260. Then you decrease the price of petrol and in two days it rises again by Rs. 30. This is not a serious economic policy but a joke with the economy,” he stated.
The former finance minister recommended that the first step is to secure an agreement with the IMF, meanwhile, there is a need to raise the average wage of workers in order for them to survive.
Contrary to Miftah’s comments, his fellow political colleague and sitting Finance czar Ishaq Dar has ruled out the possibility of any default and lambasted anti-Pakistan elements for spreading malicious rumors of such kind.
To note, Moody’s Investors Service earlier this week downgraded Pakistan further into junk status as the country struggles with the worst economic crisis in decades, with foreign reserves rising by $460 million and inflation reaching a record high. Pakistan is relying on an IMF bailout in the coming weeks but uncertainty regarding its arrival still remains prevalent and reflects in the day-to-day default gossip.