KARACHI: There is uncertainty at moment along with probability of Pakistan going into default, odds of which have spiked since country drifted away from negotiations with International Monetary Fund said, former Finance Minister Miftah Ismail. “Risk of default has reduced after reinstating market-based rupee-dollar exchange rate mechanism. However, fears of default still loom,” he said. Expressing optimism, Ismail explained that State Bank of Pakistan has very limited tools, such as increasing interest rate to control inflation and probability of further hike in key policy rate has minimised after massive rupee devaluation. “Government tried to artificially control rupee-dollar value at nominal Rs 220, which was an unwise decision,” he said.

Ismail lamented that last year Pakistan’s exports stood at only $ 30 billion as compared to imports of $ 80 billion, adding that exports should be increased instead of pegging rupee value to fixed exchange rate. He pointed out that country had been gripped by financial turmoil as debt was skyrocketing, adding “We are stuck in cycle of taking debt to pay off debt with no way out but to run current account deficit every time.”

He suggested privitisation of state-owned enterprises such as Pakistan International Airlines and Pakistan Steel Mills. “There’s no point in government running these enterprises inefficiently. They should be privatised and private sector needs to step up efforts.” SBP’s former Governor Dr Ishrat Husain said, “Flaws in economy and system are not new. Crisis began in 1970s when Zulfikar Ali Bhutto nationalised enterprises and disheartened entrepreneurs left country.”

Published in The Daily National Courier, January, 28 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.