Pakistan’s net international reserves stand at negative $14bn: Dr Pasha

ISLAMABAD: Pakistan’s Net International Reserves (NIR) stand at negative $14 billion and Islamabad is left with no option but to seek a larger portion of deposits from friendly countries in the wake of persistent stalemate with the International Monetary Fund (IMF).

It was the crux of the discussion of former finance minister Dr Hafiz A Pasha on the occasion of launching of a study titled “Leading Issues in the Economy of Pakistan”, organised by Friedrich-Ebert Stiftung (FES) Pakistan here on Thursday.

He made a projection that the exchange rate should stand at Rs322 against the US dollar.

Dr Pasha, author of the study, suggested revising the China-Pakistan Free Trade Agreement (CPFTA) whereby the trade balance was highly in favour of China. He said that the ratio of imports and exports stands at 6:1, showing the kind of Free Trade Agreement done with China.

When asked about the Plan B in case of no revival of the IMF programme, he said that as indicated by the minister for finance in his presser, Pakistan could go for debt re-profiling of its bilateral debt as Islamabad owed its bilateral debt to Paris Club and China. About 2/3 of bilateral external debt belonged to China.

“Pakistan could probably talk to its Chinese side to re-profile its bilateral debt,” he said.Out of external vulnerabilities ranking, Dr Pasha said that Pakistan stood at the 9th position among the list of 11 countries. He stated that the market-based exchange rate fuelled inflationary pressures and found that food inflation was nearing almost 50 percent out of which 53 percent was contributed by the deterioration in exchange rate and 27 percent by import compression. So, the 80 percent inflation was the contribution of exchange rate while 11 percent was contributed by rise in administrative prices of petrol, electricity and gas.Dr Pasha shared that the unemployment rate went up from 6 to 6.5 percent in Pakistan to 10-11 percent in the outgoing fiscal year. There are 2.3 million workers added to the list of employed persons. He said that for the first time in the country’s history, 8 million male youth were idle in the country, which reminded him of Arab Spring like situation as many of them were educated. There are 15 million female youth who are idle between the age of 15 to 29 years.

On poverty, he said that over 100 million Pakistanis were living in the clutches of poverty, which is the highest-ever absolute figure of people living below the poverty line in the country. He shared his findings and stated that there was a poverty gap of Rs2,400 billion for fulfilling the basic needs of those living below the poverty line against the BISP allocation of Rs430 billion in the latest budget.

He said that Pakistan had over-liberalised its trade regime and quoted the World Trade Organisation (WTO) for proving his point, which confirms that Pakistan’s imports regime was more liberalised than India and Bangladesh.

He said the imposition of agriculture income tax could fetch net revenues of Rs1,250 billion against the existing collection of just Rs4 billion by the provinces.

Dr Pasha also advocated for coming out with regional GDP figures arguing that Balochistan’s real per capita income had come down from $1,999 in 2021-22. All other provinces improved as KP had taken off, Punjab maintained its real per capita income and Sindh also did well. However, Balochistan lagged behind despite favourable NFC Award under which its share was increased and protected.

Minister of State for Finance Dr Aisha Ghaus Pasha said on the occasion that there were difficulties on the economic front but there was a need to share future course of correction and reform path. She said that there was a need to sit together as the existing polarisation would lead us nowhere.