LAHORE, Dec 17: Prime Minister’s Adviser on Finance Shaukat Tarin says the Rs20 billion market support package is not meant for rescuing the leveraged positions of a few big and rich stock brokers though pressure is being on the government in this regard.
Speaking to Dawn on the sidelines of a two-day conference on Tax Policy Options for Pakistan that began on Wednesday, Mr Tarin said he had never promised to rescue the brokers. “Did they ask me before they leveraged their positions? Did they pay taxes when they were making billions of rupees? Why should the government bail them out?” he asked.
“I had promised to put together a package for supporting the market when floor was lifted and we have fulfilled our commitment,” he said, seeking to dispel the impression that the market support fund aimed at bailing out brokers who had leveraged their positions in the market and could not exit it after the KSE put floor under the KSE 100-share index on Aug 27.
The share prices had already slumped nearly 43 per cent from their record high in April as capital flight from the country on fears of a possible sovereign default owing to deteriorating macroeconomic fundamentals and political uncertainty.
The removal of 110-day-old curbs on normal trading on Monday has already seen the KSE-100 index lose about 1,100 points.
“I am not the one to be blackmailed,” Mr Tarin said in response to a question as to the weakening of the rupee after removal of floor from under the KSE 100-share index on Monday. “The decline in the rupee value also is part of pressure being brought on the government to rescue the brokers,” Mr Tarin said, but stopped short of naming the names.
The rupee lost three per cent against the dollar in the first two days after resumption of normal market operations before recovering some losses on Wednesday.
The adviser downplayed fears of capital flight on the back of a collapsing stock market, saying the capital outflow amounted to only a few million dollars.
The market support fund, expected to become effective this week, will be used to buy scrips of the seven state-owned or managed enterprises including OGDC, NBP, PTCL, etc.
“We will start buying these scrips at their right prices which will uplift the market and boost investment,” he said.
The government intends to resell the shares it plans to lift from the market to overseas Pakistanis.
“That will make up for loss of foreign portfolio investment. In fact, it would bring back foreign portfolio investors,” the adviser said.