Dar paints picture of ‘solvent’ economy, vows to control dollar

Published October 30, 2022
KARACHI: Finance Minister Ishaq Dar holds a meeting with banks’ presidents and chief executive officers at the State Bank of Pakistan on Saturday.—APP
KARACHI: Finance Minister Ishaq Dar holds a meeting with banks’ presidents and chief executive officers at the State Bank of Pakistan on Saturday.—APP

KARACHI: Finance Minister Ishaq Dar once again reiterated that the US dollar will be brought below Rs200 and assured stakeholders of the country’s “solvent state,” fully capable of fulfilling local and international debt commitments.

Mr Dar held two meetings on Saturday with the CEOs of commercial banks and heads of major exchange companies.

Special Assistant to Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Pasha, State Bank of Pakistan (SBP) Governor Jameel Ahmad and senior Finance Division and central bank officials attended the meetings.

Read: Are more loans the answer to Pakistan’s ‘empty coffers’?

During the meeting with bank CEOs, Mr Dar shared the government’s priorities and expressed his resolve to ensure stable economic and fiscal policies.

Holds meetings with commercial banks, exchange companies; says greenback rate to fall below Rs200

The finance minister assured the banks that the government’s financial situation was “fully solvent” and it was committed to living up to its local and international commitments.

Highlighting the overall economic outlook, he said with the far-sighted and pragmatic policies of the present government, the economy of the country was on a trajectory path.

In his meeting with the heads of exchange companies, the minister warned the smugglers to stay refrain from hoarding and trading dollars.

Some experts believed the warning might also be aimed at the exchange companies, as it was issued in their presence.

However, the exchange companies’ representatives, who attended the meeting, said the minister “was soft on the exchange companies” and asked them to support measures taken to curb dollar smuggling.

Meanwhile, he also requested the forex companies to ensure an ‘appropriate exchange rate’ for the betterment of the country.

He said the current government, with its “pragmatic policy decisions”, has not only arrested the decline of the economy but also set it in the right direction.

Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan, said Mr Dar warned of action against dollar hoarders.

The finance minister assured that the rupee would soon appreciate since the dollar’s real price was below Rs200, Mr Paracha said, adding that Mr Dar also referred to the previous PML-N government when the dollar was “under control” and the interest rate was in single digits against 15 per cent at present.

The meetings have come at a time when Mr Dar was scheduled to visit China from Nov 1 with several proposals, including a loan rollover request to help Pakistan temporarily avoid a default-like situation.

Meanwhile, Pakistan, which is struggling to plug its fiscal deficits, is looking towards external creditors to stabilise to the dwindling economy.

So far, the government has held successful negotiations with the IMF to resume the loan programme, received $1.5 billion from ADB, and secured World Bank’s assurance to support disaster-related projects with $2bn.

However, the international support and inflows failed to stabilise the exchange rate, as SBP’s foreign exchange reserves kept falling due to regular debt servicing.

Earlier this month, the SBP governor informed the National Assembly’s Standing Committee on Finance and Revenue that the alleged role of eight banks in manipulating the exchange rate was being investigated.

The development came after it was reported that banks had doubled their dollar buying and were sending it abroad via credit cards as the government grappled to control the outflows.

While the exchange companies were the focal point regarding the smuggling of dollars from Pakistan, commercial banks were already held responsible for escalating the dollar price.

The government and the SBP have been trying to regulate the exchange companies for more than a year since the dollar started dominating the rupee.

However, their efforts were being hampered by several factors, mainly low forex reserves and a widening trade deficit.

Published in Dawn, October 30th, 2022

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