Finance Minister Ishaq Dar strongly criticized his predecessor, Miftah Ismail, for predicting Pakistan’s default. Ishaq Dar, a Pakistan Muslim League Nawaz (PML-N) member, expressed his anger towards Ismail, who had recently stated that the country would fail in October if the delayed International Monetary Fund (IMF) program were not revived.
Ismail, who was removed as finance minister in September of the previous year, recently informed journalists that the delay in the IMF program had caused the country’s economy to face its current difficulties.
He stated that it was evident that Pakistan would default without an IMF program in the last quarter of the financial year, if not by the end of the fiscal year. Ismail emphasized that the IMF program was essential for Pakistan to avoid default.
In contrast to Ismail’s pessimistic outlook on the country’s finances, Ishaq Dar, while addressing a business delegation in Islamabad, highlighted that the government had implemented several measures to stabilize the economy. He acknowledged that the country was going through a challenging period. Still, he assured the business community that Pakistan would overcome these challenges together as a nation, although recovery would take time.
Ishaq Dar also recounted his previous achievements in improving the economy during the PML-N’s tenure in 1999 and 2013. He expressed his concerns about the political instability in the country, holding it responsible for the ongoing economic crisis. Ishaq Dar mentioned that the most difficult reforms had already been carried out, and any negative impact had already occurred.
Regarding the delay in the revival of the IMF program, which he described as “unprecedented,” Ishaq Dar stated there were no technical reasons for it. He emphasized that ensuring the timely fulfillment of sovereign commitments was a top priority for the government. Dar criticized those who habitually predicted Pakistan’s default and called for their loyalty to the country.
While dismissing claims of an impending default, Ishaq Dar reassured the public that Pakistan was a sovereign country with significant assets, including trillions of dollars. He stated that despite the external debt of $100 billion, Pakistan possessed substantial assets, and there was no need to worry. Ishaq Dar expressed confidence that the current challenges would be overcome.
Pakistan’s $350 billion economy is facing turmoil due to financial woes and the delay in reaching an agreement with the IMF, which is crucial to avoid the risk of default. The government has been discussing with the IMF since January to resume a $1.1 billion loan tranche on hold since November. This loan is part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.
However, sources indicate that Pakistan has decided to negotiate a new program with the IMF immediately after the budget, as the coalition government plans to conclude the $6.5 billion EFF without completing all the pending reviews.
Despite nearing completion of the ninth review, a staff-level agreement is yet to be reached, and the tenth and eleventh reviews will remain pending.