Former finance minister Miftah Ismail says Pakistan will need another IMF bailout after the current one ends.
During an interview with the local private news channel ‘Geo News show Aaj Shahzeb Khanzada Kay Saath’, the former finance minister said Pakistan could avoid default if the international lender resumes its current program.
PML-N leader: Without IMF support, default risk will rise. He explained that people are buying dollars to hedge against default.
Ismail said Pakistan received more aid than expected at Geneva, which will help it negotiate with the Fund. He also suggested approaching Saudi Arabia and China for new loans.
The former finance minister said the funding gap would shrink. However, he said the gas tariff hasn’t increased since September 2020, so fertilizer, cement, and rich consumers should pay more.
He said the gas tariff must rise even if the IMF doesn’t require it.
On Monday, Pakistan secured $10.7 billion in flood assistance pledges at the International Conference on Climate Resilient Pakistan in Geneva. Prime Minister Shehbaz Sharif had launched an $8 billion flood aid appeal to help the country overcome the widespread devastation caused by the cataclysmic floods.
Miftah said Pakistanis invest in dollars rather than property because of the dollar shortage. Therefore, when the threat of default passes, dollar demand will fall, he said.
The PML-N leader said, “Most of the country’s woes will vanish when we sign an IMF agreement.”
Miftah said $1 billion in inflows deferred default risk for four weeks, and remittances fell 10%.
In this situation, a rising dollar won’t be a problem, he said. He said the dollar’s value is artificially stabilized at Rs227 when it should be Rs260.
The former finance minister said, “If we reduce default risk, the rest will be solved.”
No more new loans! Now we must return a huge amount to the world,” said Miftah, adding that the IMF negotiates concessions. He said the UAE pledged $2 billion to the IMF board and that it was hard to talk to the global lender without resolving the exchange rate issue.
Miftah said businesses wouldn’t export unless customs duties were lowered. He suggested the country would need another IMF program in June and said it was better to take new loans than ask friendly countries to defer loan payments.
Pakistan can approach Saudi Arabia, and China for new loans, said the former finance minister.
