No economic crisis: Asad

ISLAMABAD: Finance Minister Asad Umar on Tuesday dismissed the notion that the country is facing an economic crisis and said all the fundamental economic indicators are improving.

Addressing the inauguration ceremony of the 11th South Asia Economic Summit here, the minister said the financing gap for the current fiscal year has been plugged and the fruits of government's vibrant economic policies will soon be visible.

Ruling out the possibility of bringing any reversal into independence of the State Bank of Pakistan (SBP) for taking decisions on the exchange rate, Asad Umar said he possessed divergent views on exchange rate with the SBP governor, but ultimately it was the domain of the central bank to take the decision on it, based on economic fundamentals.

He said that institutional arrangement for better communication could be evolved and he had discussed this issue with the SBP governor for bringing an improvement in it.

“I did not exactly know what will be the level of exchange rate tomorrow as it’s the domain of the SBP and it is rightly so. The SBP governor did inform me about the increasing gap between interbank rate and open market rate and arising need of action to fix it. I told him about my stance, but the governor did not agree with me. I told him that you should take decision on it,” Asad Umar said.

The minister said that it was part of the PTI manifesto that no change would be brought in the autonomy of the SBP. “We believe in that the SBP will take decision on exchange rate based on economic fundamentals and not by the Ministry of Finance,” he said. “Although, I knew that it will happen but I did not know when it will happen and how much the value of rupee will be devalued,” he said.

The minister said by the start of current year, the value of rupee against a dollar was Rs105 while by time when the government was handed over to the newly-elected government in August this year, the value plunged to Rs128 and now after lapse of further four months, the value had further decreased by Rs10.

Asad Umar said the current account deficit was brought down from $2 to $1 billion on monthly basis, but the country could not sustain such level of deficit on per month basis. The current account deficit, he said, used to be $18 billion last year, adding that it was brought down but more structural reforms were required to fix the economy.

The minister said the Indian response to Pakistan’s goodwill gesture to open the Kartarpur Corridor was unfortunate, however, Pakistan is still pinning hopes to strengthen Saarc cooperation in future.

“We really need to think out-of-the-box solutions for regional cooperation amid tensions and confrontations between the two states,” he said, adding that intra-regional trade, especially trade between Pakistan and India, is one of the major growth drivers. Stressing the need to create political space for regional cooperation, he said it is our inability that we failed to get people of the region out of poverty.

Highlighting the government’s role in promoting cross regional energy transfer and inter-regional trade, Asad Umar said channelisation of non-political forums to build political space for policy making is required for an effective cooperation among South Asian states.

Dr Shamshad Akhtar, former caretaker finance minister, said that it is the age of globalisation and digitisation, amid nationalism call for enhanced regional cooperation and connectivity. “Regional connectivity is of course gaining momentum today, where Belt and Road Initiative (BRI) led by China can steer the effort for regional cooperation,” she said.

Dr Shamshad Akhtar said that the BRI has the potential to generate momentum to enhance regional partnership, which is currently in the state of deadlock especially between Pakistan and India.