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Govt unaware of full scope of current economic crisis: Miftah Ismail

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2 years ago

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  • Miftah says majority of the issues are self-inflicted.
  • Pakistan’s economic woes are not caused by IMF, former finmin says.
  • Urges govt to raise minimum wage to match pace of inflation.

Former finance minister Miftah Ismail said that the coalition government is unaware of the full scope of the current economic crises, emphasising that Pakistan has “been facing a crisis persistently,” The News reported Friday.

Miftah — while speaking during a pre-budget discussion at Salim Habib University titled ‘Pakistan’s financial crisis and a way forward’ — said Pakistan’s economic issues were not caused by the International Monetary Fund (IMF), but rather by “the successive leaderships of the country”.

“Pakistan should not be where it is right now; two million shopkeepers pay Rs30,000 in taxes,” he said, warning that more economic issues will arise in the nation, and “we must draw lessons from them”.

‘Majority issues are self-inflicted’

Commenting on the delay in the revival of the IMF programme, he reiterated that Pakistan needs the IMF for the 24th time to avoid default.

Miftah said: “Pakistan was going through a very difficult economic time and the nation does not have the resources to pay its debts.

“We have to go for an IMF programme, if we don’t go, we will default and no one in the world will give us loans,” the former finance minister said.

He said the majority of the issues are, in fact, self-inflicted; however, getting out of the economic spiral will take some time.

Pointing to the lack of revenue, the former finance minister said that the country needed to take new loans to pay the interest on the previous loans. 

He added that when a country borrows to retire the previous loans, the debt of that country becomes unsustainable.

Minimum wages must be raised

Regarding the upcoming budget, the former finance minister suggested that minimum wage — which is currently at Rs25,000 — must be raised to keep pace with the exorbitant inflation rate.

“For the past 75 years, 90% of Pakistanis have experienced the effects of inflation; nevertheless, 10% of the middle class and elite today also experience price hikes,” he pointed out.

Pakistan’s inflation, based on the consumer price index, increased to a record high of 36.4% in April from 35.4% in the previous month. The increase in inflation was due to higher food inflation amid currency devaluation.

He noted that Pakistan has a higher inflation rate than India and Bangladesh. “Not all inflationary pressures can be attributed to the increase in prices worldwide,” he said, adding that Pakistan’s policy decisions were flawed.

Highlighting the need for increased provincial competition for better performance, the former finance minister demanded that more federal powers should be transferred to the provinces. 

He claimed that because the US adopted this strategy, its states’ economies fared better. 

Miftah suggested that a meeting should be held between all the political stakeholders in Pakistan to discuss the best course of action to rescue the nation from this current economic crisis.

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Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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