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Govt unaware of full scope of current economic crisis: Miftah Ismail

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  • Miftah says majority of the issues are self-inflicted.
  • Pakistan’s economic woes are not caused by IMF, former finmin says.
  • Urges govt to raise minimum wage to match pace of inflation.

Former finance minister Miftah Ismail said that the coalition government is unaware of the full scope of the current economic crises, emphasising that Pakistan has “been facing a crisis persistently,” The News reported Friday.

Miftah — while speaking during a pre-budget discussion at Salim Habib University titled ‘Pakistan’s financial crisis and a way forward’ — said Pakistan’s economic issues were not caused by the International Monetary Fund (IMF), but rather by “the successive leaderships of the country”.

“Pakistan should not be where it is right now; two million shopkeepers pay Rs30,000 in taxes,” he said, warning that more economic issues will arise in the nation, and “we must draw lessons from them”.

‘Majority issues are self-inflicted’

Commenting on the delay in the revival of the IMF programme, he reiterated that Pakistan needs the IMF for the 24th time to avoid default.

Miftah said: “Pakistan was going through a very difficult economic time and the nation does not have the resources to pay its debts.

“We have to go for an IMF programme, if we don’t go, we will default and no one in the world will give us loans,” the former finance minister said.

He said the majority of the issues are, in fact, self-inflicted; however, getting out of the economic spiral will take some time.

Pointing to the lack of revenue, the former finance minister said that the country needed to take new loans to pay the interest on the previous loans. 

He added that when a country borrows to retire the previous loans, the debt of that country becomes unsustainable.

Minimum wages must be raised

Regarding the upcoming budget, the former finance minister suggested that minimum wage — which is currently at Rs25,000 — must be raised to keep pace with the exorbitant inflation rate.

“For the past 75 years, 90% of Pakistanis have experienced the effects of inflation; nevertheless, 10% of the middle class and elite today also experience price hikes,” he pointed out.

Pakistan’s inflation, based on the consumer price index, increased to a record high of 36.4% in April from 35.4% in the previous month. The increase in inflation was due to higher food inflation amid currency devaluation.

He noted that Pakistan has a higher inflation rate than India and Bangladesh. “Not all inflationary pressures can be attributed to the increase in prices worldwide,” he said, adding that Pakistan’s policy decisions were flawed.

Highlighting the need for increased provincial competition for better performance, the former finance minister demanded that more federal powers should be transferred to the provinces. 

He claimed that because the US adopted this strategy, its states’ economies fared better. 

Miftah suggested that a meeting should be held between all the political stakeholders in Pakistan to discuss the best course of action to rescue the nation from this current economic crisis.

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Changes in the US dollar’s value are directly correlated with variations in gold prices.

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The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

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Pakistan pledged to finish building the TAPI gas pipeline.

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The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

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The price of gold is still rising in Pakistan.

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According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

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