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Friday May 17, 2024

Path Pakistan is on might take towards default: Miftah Ismail

Threat of default will keep looming until government completes IMF ninth review, says ex-finance minister

By Business Desk
December 13, 2022
Former finance minister Miftah Ismail speaks during Geo News programme Aaj Shahzeb Khanzada Kay Saath on December 13, 2022. — YouTube Screengrab via Geo News
Former finance minister Miftah Ismail speaks during Geo News' programme "Aaj Shahzeb Khanzada Kay Saath" on December 13, 2022. — YouTube Screengrab via Geo News 

Former finance minister Miftah Ismail Tuesday claimed that chances of Pakistan heading towards default have increased, urging the incumbent government to take steps to avert the looming threat.

Speaking during Geo News' programme "Aaj Shahzeb Khanzada Kay Saath", Ismail said: "Pakistan should not default, however, I definitely believe that the path we are on might take us towards default as the risk has increased. We should take steps to avoid the danger [of default]."

He said the threat of default will keep looming over Pakistan until the government completes the International Monetary Fund (IMF) the ninth review.

"Pakistan is in jeopardy; it has gone back in jeopardy and as long as the IMF is not back on the table, the threat of default will remain high," Ismail — who held the post of finance minister for over five months — said.

'PTI pushed Pakistan towards default'

The former finance minister refused to accept Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan's narrative of early elections and said that the previous government had pushed the country towards default.

"Khan is responsible for pushing Pakistan towards default; he is the one who broke his promise with the IMF; Khan is the one who wanted to derail the IMF programme when we tried to revive it under Prime Minister Shehbaz Sharif's leadership."

Pakistan ended its immediate default risk earlier this month when the State Bank of Pakistan (SBP) made the payment of $1 billion for the sukuk bond.

But since then, the foreign exchange reserves have hit a critical level after falling 10.45% to $6,714.9 million — a four-year low — as of December 2.

The fiscal deficit has already touched 1% of the GDP in the first quarter of the current financial year against 0.7% of the GDP agreed with the IMF.

However, Minister for Finance and Revenue Senator Ishaq Dar — who is of the same party as Miftah — said that Pakistan would not default as it was headed in the right direction.

In a bid to shore up its forex reserves as the country's ninth review of a $7 billion IMF bailout ran into snags, Pakistan is expected to secure a multibillion-dollar financial support package from long-time ally Saudi Arabia this month, two sources said.