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Rupee falls on depletion of foreign exchange reserves, not IMF: Asad Umar

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ISLAMABAD: Finance Minister Asad Umar on Saturday attributed the rupee free-fall to depleting foreign exchange reserves but not on the reason to approach IMF for a new package.

While talking to media, said the devaluation did not occur due to Pakistan’s decision to go for the IMF, but it happened because of the principle of demand and supply.

“Continuous depletion of exchange reserves resulted in the devaluation of the rupee,” he added.
He also attributed the devaluation of the rupee to the overall economic condition of regional and international countries. Due to fresh sanctions imposed by the United States on Iran, the global petroleum prices were increasing which resulted in increased import bill for Pakistan.
Highlighting the performance of currencies of various countries during the last six months, Asad Umar said Pakistan‘s currency had devalued by 7 percent and that of India by 10.9 percent during the period. Similarly, the Turkish currency also depreciated by 34 percent, the Russian currency by 12 percent, British pound by 7 percent, and Chinese currency by 8 percent.

He announced that a delegation of the International Monetary Fund (IMF) would visit Pakistan on November 7 to finalize terms and conditions for a bailout programme.

Talking to media persons here, the minister said the government’s decision to approach the IMF for the bailout package was the inevitable due to wrong economic policies of the past government causing enhanced current account deficit.

Minister of State for Revenue Hammad Azhar was also present on the occasion.
“At present, the total shortfall of the country’s foreign exchange reserves is around $12 billion, which cannot be bridged through the IMF loan. The government will also utilize other sources for the purpose,” Asad Umar said.

He said during his meetings with the IMF officials in Bali, Indonesia, the two sides expressed the desire that it might be the last bailout package for Pakistan.

“We have sought the package only to get relief for the time being and run the country’s economic system smoothly,” he said. “Meanwhile, we will improve our capacity by gradually reducing the trade deficit, increasing foreign remittances, improving tax revenues, and introducing other revenue generation measures in a bid to avoid the IMF packages in future”.

The finance minister said it was not the fault of the last PML-N government to avail the IMF’s bailout package and similarly, now the Pakistan Tehreek-e-Insaf government was forcing the approach the international lender.

Replying to a question regarding the United States’ statement that Pakistan was seeking a bailout package from IMF only to repay the debts taken on account of the China Pakistan Economic Corridor, the minister said, “I categorically reject the US statement as it is a 100 percent wrong statement and there is no truth in it.”

He said Pakistan had to repay a debt of $9 billion to the IMF this year while $ 300 million would have to be paid to China annually on account of CPEC for next few years.

“Debts for CPEC projects given by the Chinese side are based on very easy terms and conditions and Pakistan does not need any external aid to pay the same,” he added.

The minister said the Pakistan government would share the details of Pakistan’s foreign debts with the IMF as it was a normal routine while negotiating a package with the lender.

He said during the previous government’s tenure, the IMF package was completed in September 2016 and by that time the country’s foreign exchange reserves’ remained stable. However, the reserves kept on falling every month since October 2016, he added.

To another question, the minister said it was possible for Pakistan to sustain without an IMF programme. However, “if we do not opt for the IMF package, the country’s economic condition will further deteriorate which will ultimately affect the common men.”

To a question, the minister said Saudi Arabia and the United Arab Emirates had not put any conditions on giving the loan to Pakistan, which was not acceptable to the latter. The matter of deferred payment for import of crude oil to Saudi Arabia was not closed as yet, he added.

He said the government was trying its best not to pass on the burden to the poor. “We increased the gas prices only for the rich. We also did not take any revenue measures in the recent supplementary finance bill that could affect the low or lower-middle-income people,” he added.

To another query regarding the IMF’s condition to privatize the loss-making State Owned Entities (SOEs), Asad Umar said the government had a plan to put the bleeding SOEs on right track and make them profitable entities.

He said the government had also no plan to cut down the number of employees of such SOEs. The main problem of those entities was corruption and bad governance, which the government was committed to resolving soon, he added.

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