This was stated by the Minister of Finance Miftah Ismail. on Friday what government will control imports for in next three months, even if it happened in cost of Slow down growth.
“I won’t allow import to increase for three months and in in the meantime we will come up with a policy. I understand it growth will be reduced for a little, but I have no other choice,” he said, speaking at a ceremony at the Pakistan Stock Exchange (PSX).
Speech about the exchange rateIsmail noted that dollar outflows exceeded inflows, so the rupee plummeted against U.S. dollar over in last month.
“Even small the store owner knows that if your sale is Rs 30,000 per day and you buy stock worth 80,000 rupees then you need to reduce shares you buy. We did the same. We reduced imports up to 4.9 billion dollars from 7 billion dollars and all problems ended.”
Finance minister noted that the government’s restrictions on US imports will affect automobile and electronic appliances industry. He said he didn’t want create unemployment and first the priority was to reduce of import.
“When there was pressure, we imported a lot of oil and gas. At this time we have [stock of] 30 days for diesel and gasoline. We have oil [supply] for six months. We are very comfortable in terms of our energy security and supply, and other obligations. We will control the import for in next four months.”
minister indicated out that the country’s import account in June was $7.7 billion, and if current the account deficit has widened to the extent that it would create pressure on rupee.
Pakistan Import Bill for previous financial year amounted to 80 billion dollars, and exports – 31 billion dollars. “No country can grow and be stable with of such kind of current account deficit.
He said that while it was good thing for development countries to run a small deficit, Pakistan had failed productive use his long periods of deficit.
PML-N government during his previous tenure set up power stations with a capacity of 11,500 MW of energy, but the doubling of electricity production did not lead to a doubling in industrial and export sectors, he complained.
“Another countries like China set up plants after installation up power plants. We just built wedding halls and we are not [earn] foreign currency.”
minister said that as long as he believed in in model of export expansion, not import substitution, government needs to be controlled budget deficit for who immediately steps had to be taken.
He added that while the economic situation of Bangladesh, Vietnam and Pakistan were similar in nineties, now their exports were $100 billion, and Pakistan had to “ask for money in each place”.
“It’s not fun. I think it’s time to act like mature, worthy nation. new the tax-to-GDP ratio is 9.2 percent. You can not run country on this is. You need more money”.
negotiations with the IMF
Ismail said the country was close to default when government enter into power which is why he turned to the International Monetary Fund (IMF) a few days after he became a financial minister.
“We didn’t have another optionhe insisted. The country had 10 billion dollars. in reserves back then had to pay back $21 billion in in next year. “It’s not even debt service, just debt redemption.
“Therefore, the IMF had to come, it will come. Then the World Bank will come; then ADB (Asian Development Bank); then Chinese bank Asian Infrastructure Bank, also said he would give money if the World Bank does. Even friendly countries politely encouraged us get money from the IMF because no one to want back sinking venture”.
government had to go through some “very difficult decisions” how resultIsmail said. “We have raised the price of gasoline and inflation has increased, but if dollar payments exceed income how far we can intervene? There are IMF restrictions against intervention. first the point is to remain solvent and save yourself from default.”
minister said it’s important qualify which of growth country wanted – boom and bust cycle or steady one. “Turns out if our growth is inclusive, it will also be sustainable. If we do the bottom [class] people a little richer, then local consumption will increase a little because they have local products in their consumer basket.
government favored two sectors—agriculture and exports—and although incentives already it was suggested for in the former good encouraging policy will be presented for exporters soonIsmail said.
“We are not want growth without export. Growth is only good when it is export-oriented.”
When asked if the value of the rupee was undervalued, he replied that it was not. one knew the correct number. He added, however, that government took forex market to the point where dollar inflow will exceed outflow and exchange rate it would be stable.
Talking about leaving of a fixed tax on small merchants, Ismail said he thought the tax imposed was “very adequate and good”.
“We asked for just 3000 rupees on check of 30,000 rupees. No shop owner earns less than Rs 100,000 per month. hired people earning it amount to pay more”.
He shared that he promised specific payments to the IMF. “We will definitely do sure if there is a loss of income, we will cover [it]. To be very honest with you, there is a loss of income of about 7 billion rupees.”