According to former finance minister Miftah Ismail, after the current bailout programme expires, Pakistan will need to secure a new one from the International Monetary Fund (IMF).
According to the Miftah, if the international lender agrees to continue its current programme, Pakistan can avoid default.
The PML-N leader claimed that without IMF assistance, the risk of default will increase. According to him, the increased demand for dollars is due to people purchasing them as a hedge against default fears.
Ismail claimed that Pakistan received more aid than expected during the Geneva conference, which will ease Islamabad’s negotiations with the Fund.
He also stated that new loans from Saudi Arabia and China could be requested.
According to the former finance minister, the financing gap has grown but will eventually close.
He claimed that because the gas price has not increased since September 2020, wealthy consumers and industries such as the cement and fertiliser industries must now pay higher prices.
Even if the IMF does not require it, he believes that raising the gas tariff is necessary.
Following the launch of Prime Minister Shehbaz Sharif’s $8 billion flood aid appeal to assist the country in recovering from the extensive damage caused by the cataclysmic floods, Pakistan received pledges for $10.7 billion in flood assistance on Monday at the International Conference on Climate Resilient Pakistan in Geneva.
This is significantly more than the $8 billion that Pakistan had hoped for.
Miftah claimed that as a result of the country’s dollar shortage, Pakistanis are investing in dollars rather than real estate.
He went on to say that once the threat of default has passed, demand for dollars will naturally fall.
PMLN leader stated:
“Most of the country’s woes will vanish, the day the country signs an agreement with the IMF.”
According to Miftah, every $1 billion injected delays the default risk by four weeks. He also noted a 10% decrease in remittances.
According to him, there will be no problems if the value of the dollar rises in such circumstances.
He claims that, while the value of the dollar is artificially held constant at Rs227, its true value is Rs260.
The former Finance Minister stated:
“If we reduce the default risk, the rest of the issues will be automatically resolved.”
He further said:
“Gone are the days when we could have obtained new loans.
Now, we have to return huge amount to the world,”
He added that communicating with the international lender was difficult without resolving the exchange rate issue and that the UAE had pledged $2 billion to the IMF board.
According to Miftah, businesses in the country will not export unless customs duties are reduced.
He suggested that the country enroll in another IMF programme in June and that it was preferable to take out new loans than to ask friendly nations to postpone loan payments.
According to the former finance minister, Pakistan is in talks with China and Saudi Arabia about new loans.