Pakistan no longer faces default risk, minister asserts

Pakistan is not facing default risk, the country's junior finance minister has said, amid claims by former prime minister Imran Khan that default is staring the cash-strapped nation and there is a delay in formal talks with IMF on the ninth review of USD 7 billion loan programme.

Minister of State for Finance and Revenue Aisha Ghaus Pasha assured the nation on Friday in the National Assembly when Mussarat Rafiq Mahesar of Pakistan Peoples Party (PPP) put a direct question to her, “If Pakistan is going to default?" Dawn newspaper reported on Saturday.

There are also reports about delays in formal talks with the IMF on the ninth review of the USD 7 billion loan programme.

“...there is no such possibility. Yes, we were worried when we took over the government [in April] because at that time the IMF programme was suspended and the avenues of getting external finances were closed for us,” said the minister.

However, she claimed, the situation had improved a lot after the government took some “very difficult decisions” and revived the IMF programme.

Pasha said it was a fact that the country in the past was unable to borrow money from other multilateral and bilateral agencies and even the commercial market to finance its external needs due to the suspension of the IMF programme.

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However, she pointed out that after the successful seventh and eighth reviews of the IMF programme, Pakistan had no immediate threat of default. Instead, she claimed, the country’s exports had improved, foreign remittances were coming and foreign direct investment was getting better.

The minister stated that Pakistan was now on the IMF’s track and committed to its programme.

In response to another question, Pasha informed the house that at present Pakistan’s 50 per cent economy was estimated to be undocumented. However, while quoting different research studies, she said the size of Pakistan’s informal economy was estimated to be 35.6 per cent.

According to the World Bank, she said, the informal sector was one-third of the country’s GDP (Gross Domestic Product).

She said efforts were being made to enhance the size of the formal economy, adding that a well-structured taxation policy and effective enforcement thereof could play an important role in achieving this objective. The government was making all-out efforts to bring reforms to the tax collection system in a bid to generate maximum income to create facilities for taxpayers.

The minister stressed the need for developing a civic sense in every Pakistani so that he or she should pay due taxes honestly.

She lamented that Pakistan’s tax-to-GDP ratio was only 9pc, which was considered to be low in the world.

Dawn also reported that in a written reply to a question from another PPP lawmaker Shamim Ara Panhwar, Finance Minister Ishaq Dar informed the house that the total value of the country’s foreign exchange reserves stood at USD 13,721.9 million on November 4. Giving a break-up, he said, the foreign exchange reserves held by the State Bank stood at USD 7,957.9m and by commercial banks at USD 5,764m.

Responding to questions about the country’s foreign debt, Minister for Economic Affairs Sardar Ayaz Sadiq told the house that the previous Pakistan Tehreek-i-Insaf government had taken USD 47,105.85m loans between August 2018 and April 2022.