ISLAMABAD: Finance Minister Ishaq Dar has squarely rejected the notions that the depreciation of Pakistani currency is a result of some implicit understanding between the government and the International Monetary Fund (IMF).

“Nothing could be further from the truth. Let me categorically reject such speculations,” the minister said while speaking at the launch of 6th Annual Report of the Institute of Public Policy of Beaconhouse National University, here on Monday.

Dar said: The issue of adjustment of rupee-dollar parity was not even discussed during meetings with IMF officials. “I am disappointed to come across comments and analysis by certain eminent economic experts that rupee is bound to depreciate to the extent of Rs114. I would urge refrain from issuing such speculative statements which neither serve any purpose nor are in national interest,” the finance minister announced.

Dar explained that the IMF programme of $6.64 billion is on the basis of home-grown reform agenda as enshrined in PML-N manifesto. Not only has this programme stabilised our external account, but it has also re-established the confidence of other international donor agencies and international banks for development partnership with Pakistan as an IMF member state.

International financial institutions and banks, which were hitherto hesitant to do business with Pakistan, have responded positively and are now approaching the government for doing business which had halted for the last three years, he said.

Dar reiterated that the commitments made by the government with IMF would be met as they are in the interest of Pakistan and its economic future.

He said that ‘Standard & Poor’s and Moody’s’ have given a positive outlook on Pakistan after a long time and the Overseas International Chambers of Commerce, which conducts regular surveys on business confidence, has raised its index for Pakistan from a negative of 34 to a positive of 2.

“Our journey is not going to be easy; not is it going to be short. It will be full of challenges, and we many have to sacrifice at every step. But for the happiness, prosperity and honour of our beloved country and the generations to come, this is a sacrifice that we must be prepared — and prepared readily — to make,” the finance minister advised the nation.

The minister said that the government had formulated a medium-term budgetary framework for 2013-16 to put the economy on a trajectory of sustained growth.

Under this framework, our goals by fiscal year 2016 will be: GDP growth to rise around 7 per cent; investment-to-GDP ratio to rise to 20pc; foreign exchange reserves to be increased around $20 billion; and public debt to be reduced to 57.5pc of GDP.

“There will be a reduced domestic borrowing, reduced debt-to-GDP ratio, zero borrowing from the State Bank, and enhanced developed spending in current expenditures as part of government’s policy to achieve macroeconomic stability,” he said.

The Institute of Public Policy, in its report on the state of the economy, says that the country’s economy in grim today and the deteriorating situation clearly requires immediate attention of the policy makers in particular to arrest the dangers on the external financial side.

Likewise, the challenges on the fiscal side in the area of tax collection, management of public enterprise losses and handling of energy shortages have to be addressed. The previous government was clearly not able to muster enough political will and support to introduce the required reforms, it notes.

According to the report, the large and growing macroeconomic imbalances have put Pakistan for the first time in its history in the danger of stagflation. Public finances have deteriorated very significantly.

On a positive side, the report says that despite the long list of negatives, some segments of the economy are showing resilience. In this regard, the report mentioned rising stock market, private consumption, and improvement in agriculture.

The report called for a comprehensive and coherent strategy of higher tax mobilisation, both through policy reform and improvement in tax administration. “Such a strategy cannot succeed without strong political will and a well-paid but honest tax collection service,” the minister remarked.