Pakistan running deficit of $2bn a month, don’t expect short-term miracles: Asad Umar

Asad Umar

ISLAMABAD: Pakistan’s finance minister-in-waiting Asad Umar said that he will not rule out loans from the International Monetary Fund (IMF) or borrowing from friendly nations as the country struggles to deal with its latest economic crisis.
Umar warned Pakistanis not to expect short-term miracles, saying the country faced growing pressure on its balance of payments — a dire economic situation that was one of the worst in the nation’s history.
“However, we came out of it earlier, and we will come out of it again,” Umar told a press conference at the Pakistan Tehreek-e-Insaaf (PTI) office in Islamabad on Tuesday.
The ruling party’s financial guru said: “By end of September, we should be able to set a direction. Urgent decisions have to be made.“The options available are commercial borrowing and bilateral loans from friendly countries.
It could be the IMF, global capital markets or overseas Pakistanis,” he said. Pakistan’s current account deficit has ballooned to 43 percent at $18 billion from the previous fiscal year. Its foreign exchange reserves are close to rock bottom — barely enough to cover two months of imports — with a widening trade gap approaching $10.3 billion.
Meanwhile, the rupee is extremely volatile against the US dollar, falling over 14 percent in value this year, though there was a slight recovery after the July elections. Umar blamed the former finance minister, Miftah Ismail, of Pakistan Muslim League Nawaz (PML-N) for the crisis.
“The (budget) targets were not realistic. The country was run on raw politics. The decision-making deliberately put the Pakistani economy at risk just to win an election. I can’t remember the last time this happened when you overshot your fiscal deficit by almost 70 percent.” China, which is investing $57 billion in its China Pakistan Economic Corridor (CPEC),
reportedly loaned Pakistan $2 billion this month in addition to previous lending. Meanwhile, Asad Umar said that Pakistan had been running a current account deficit of $2 billion a month for the last three months.
Addressing a US think-tank from Islamabad, Mr Umar suggested resolving the Afghan dispute to improve Pakistan’s economic prospects and disagreed with those who say that political governments cannot make decisions about Afghanistan.