‘Pakistan in financial emergency’

Business Desk
KARACHI: The consistent depreciation of the rupee is deepening the economic crisis in the country said the Pakistan Business Forum (PBF), as its leaders called upon the State Bank of Pakistan (SBP) to take necessary measures to stop market speculation and resolve the issue.
In a statement released on Monday, PBF CEO, Ahmad Jawad said, “Pakistan’s economy continues to slump despite resumption of the much-awaited International Monetary Fund’s (IMF) Programme. Finance Minister Ishaq Dar must announce a clear policy on the rupee to ease the pain of traders and to save the industries.”
“High inflation, unemployment and low profitability continue to plague the business community and despite that the government has withdrawn its electricity concession given to exporters and is projected to increase the levy on petrol and diesel to Rs50 per litre by January 2023. Adding to their miseries, the government is also considering imposing GST – all negative indicators for the country’s economy,” he added.
“Even bond and currency markets, which had shown more confidence in Pakistan after the IMF deal, are pricing in high once again over concerns of the country defaulting on its foreign debt,” said Jawad.
“Since the end of August, the yields on some of the government’s international bonds have jumped by a third, while the currency is one of the worst performing in Asia,” reads the statement.
“Is it not shameful for Pakistan that we rejoice in repaying the $1 billion Sukuk, but don’t take any steps to save the dollars we are wasting. Using daylight will save $3.5 billion,” claimed the PBF CEO.
“We still have foreign debt of $130 billion and $73 billion due in three years. Our deficit for next three years is a minimum of $20 to $30 billion. Additionally, super inflation is killing the poor. This is a financial emergency,” lamented Jawad.
Speaking to the Express Tribune, Optimus Capital’s Head of Research Muhammad Arsalan Siddiqui said, “Currently, the major issue is to arrange external funding to meet foreign outflows at a time when the SBP reserves are around $7 billion with an import cover of only 1.1 months against the minimum required standard of three months.”
The foreign commercial loans were targeted at $7.7 billion for FY 2023, while the government was only able to receive $0.2 billion during July-October 2022, he said, adding that “The Chinese deposit rollover of $4 billion is still pending.”
“Due to the prevailing high yields, the international Sukuk and Eurobond market cannot be tapped, which was earlier targeted at $2 billion,” Siddiqui maintained.
“Lastly, the IMF’s Ninth review is still pending, which is very critical for the disbursement of $1 billion and will subsequently simplify acquiring additional funding from other multilateral and bilateral lenders. For now, however, these uncertainties are building immense pressure on the FX reserves and currency,” he explained.
The PBF CEO further noted that tax revenues, industrial production and other targets set by the government have been shredded. “All the figures have gone haywire,” he lamented.