ISLAMABAD: Quashing rumours about a financial emergency or sovereign default, Finance Minister Ishaq Dar on Friday counted a series of financial, legal, security and constitutional challenges to suggest that holding polls in Punjab and Khyber Pakhtunkhwa before the general election was impossible.

Speaking at a news conference, the minister said the International Monetary Fund (IMF) was now helping Pakistan fill a $5bn to $7bn external financing gap for the current fiscal year, as the government had completed all the prior actions required for a staff-level agreement.

“The last unusual prior action about a power surcharge for the next year had also been completed,” he said but conceded that the IMF estimated $7bn financial shortfall against Pakistan’s projection of $5bn.

This could be easily covered by taking into view the current account deficit, the rollover of some external loans and a $950 million loan from the World Bank’s Resilient Institutions for Sustainable Economy (RISE) programme.

Counts many hurdles if general elections held after Punjab, KP polls; says govt expects $1.3bn financing from China soon

Responding to a question, Mr Dar said there were different opinions about the Supreme Court’s judgement on holding elections in the two provinces within 90 days that whether it was a split decision of 3-2 or 4-3.

“This is a very serious question,” he said, adding that it was still unclear how the Pakistan Democratic Movement coalition would take a final decision, “but there are some apparent and hidden pressures which could not be discussed in public that if the country’s leaders do not act wisely, the state could be harmed”.

The minister recalled that the 90-day deadline had thrice been missed in the past — in the aftermath of the killing of former prime minister Benazir Bhutto, floods, and earthquakes.

“Substantial funds and security personnel have been deployed to the national census. Is it possible to hold elections in half the country under the previous census and half under another census?” Mr Dar wondered and insisted that an additional Rs15bn funds would be required for elections in Punjab and KP.

He said it would be a big challenge when there would be three governments in place and elections would be taking place in two provinces and then with a gap of two to three months, elections would be taking place for the national and two provincial assemblies and two governments would be in place that would cast doubt on the election results.

“How will this be done? There will be no neutral set-up,” he said, insisting that adjusting the election schedule by two to three months should not be a big issue.

He criticised PTI Chairman Imran Khan for allegedly destroying the economy and the country’s credibility among friendly countries and the international community and said there was no truth to the default mantra propagated by the PTI government.

Responding to a question, he said there was “neither a requirement, nor consideration or decision for the financial emergency”.

Mr Dar said Pakistan had completed all the prior actions for the IMF staff-level agreement, but a fresh prior action had suddenly cropped up at the last moment for the continuation of a surcharge on power sector debt financing. The cabinet’s Economic Coordination Committee (ECC) has already approved the surcharge earlier this week.

Soon after Mr Dar’s Friday presser, the ECC’s decision to impose Rs2.63 per unit average surcharge (ranging from Rs1.45 to Rs3.23 per unit) for the fiscal year 2023-24 was also endorsed by the federal cabinet and conveyed to the IMF mission.

Noting that the rupee had depreciated by over Rs20 per dollar in the previous two days but then appreciated by Rs7-8 on Friday, the minister said the matter fell in the jurisdiction of the State Bank of Pakistan (SBP) under the law changed by PTI under the IMF programme signed in 2019.

“When you have signed an agreement and changed the law, you have to respect it,” he said while referring to a market-based, free-floating exchange rate.

The minister confirmed that the SBP and customs had tracked the smuggling of dollars in large quantities and there were incidents where smuggling of commodities like wheat and fertilisers had been replaced by foreign exchange.

He said a security agency had reported the transportation of $2bn a year through its vehicles to Peshawar from Karachi and the government was looking into ways to control the menace with the support of relevant stakeholders.

The finance minister conceded the IMF and the Pakistan government had different projections about the external financing gap for the current fiscal year, but he appreciated the support and promise of the IMF to help bridge the gap through bilateral and multilateral lenders.

Mr Dar declined to respond to criticism from his predecessor Miftah Ismail over economic policies, saying he had groomed him as chairman of Board of Investment. Mr, however, criticised without naming former Federal Board of Revenue (FBR) chairman Shabbar Zaidi, and said he should be behind bars “for playing havoc on the country’s revenues”.

He said all documentation had been completed for the arrival of $1.3bn financing from the Industrial and Commercial Bank of China (ICBC) in three instalments to build foreign exchange reserves.

“All our formalities with the ICBC are complete as of last night. We returned them $1.3bn in the last few months. They have renewed the facility,” he said, adding that $500m of the amount would be available to Pakistan by Monday or Tuesday followed by another $500m in 10 days and then $300m.

‘Masses know their criminals’

Meanwhile, Minister for Information and Broadcasting Marriyum Aurangzeb in a series of tweets shared numbers on the economic performance under the PTI government and the PML-N’s previous tenure from 2013-18, with the hashtag “masses know their criminals”.

According to the data, the FBR collected Rs3,843.8 billion during the PML-N’s five-year and Rs 3,828.5 billion during the PTI rule.

Similarly, the fiscal deficit stood at 4.1 per cent during 2013-18, but then rose to 7.9pc over the next four years under the PTI, the data showed.

Likewise, Pakistan’s GDP fell from $356.8bn during the PML-N tenure to $300.8bn during the PTI rule, the data shared by the minister showed.

Published in Dawn, March 4th, 2023