Ishaq Dar rejects rumors about Pakistan’s default

ISLAMABAD: The Federal Finance and Revenue Minister Senator Muhammad Ishaq Dar virtually spoke to a ceremony that marked the listing of Pakistan’s first development REIT. Earlier this month Arif Habib Securities announced that GRR is going to be listed on the Pakistani stock market. A REIT, or simply a Real Estate Investment Trust, is a way to raise public money, into real estate projects, through the stock market. 

Talking to the ceremony on Wednesday, Mr. Dar, rejected the rumors about Pakistan’s risk of defaulting. He assured that Pakistan has “resilience” and will survive all challenges. 

He was addressing (through a video link) an audience of capital market players including Chairperson PSX Dr. Shamshad Akhtar,  MD, Mr. Farukh Khan and Mr. Arif Habib.

The Finance Minister condemned that certain elements involved in dirty politics were active in disinformation about the country’s economic condition and created chaos where the people had started buying gold and dollars.

He expressed his satisfaction with the listing of a development RIET at PSX. However, he observed, Pakistan could not progress much on this account since the AHDRML (A rental REIT) was listed in 2015. He referred to India who, compared to Pakistan, had a high REIT portfolio.

He said when he took over as the Federal Finance Minister on September 28, 2022, he identified the areas with a special focus on the corporate sector, the Security Exchange Commission of Pakistan and the Pakistan Stock Exchange.

He regretted that SECP, which is the regulator of the capital market of the country, performed non-satisfactorily over the last couple of years. However, he ensured that he had taken certain concrete steps.

He added that, during his previous tenure, Dar along with his team worked hard and brought many amendments to the SCEP laws including its outdated Act, which continued giving a boost to the capital market of the country.

He recalled the challenges in the merger of the Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange into one entity branded as the Pakistan Stock Exchange (PSX), which helped the Pakistan stock market to emerge as the fifth leading market in the world. “I wish those golden days would come back.”, said the finance minister.

He assured Arif Habib and PSX’s Managing Director Farrukh Khan that Commissioner SECP Abid Saeed along with his team would sit with them and work out the proposals submitted by them to a logical conclusion.

He would also ask Federal Board of Revenue authorities to join and work on these proposals.

The Finance Minister thanked the business community of the country for their support to the government’s policies and their decisions which were aimed at strengthening the national economy. He mentioned that in 2013, it was the same business community, with the support of whom, the PML-N government turned around the sinking economy.

Ishaq Dar said that, because of the defective policies and non-professional approach by the previous government, today Pakistan’s economy has serious challenges, mainly financial stress.

“Today, we are knocking on doors for even a little amount of one billion dollars,” he said, adding that today Pakistan had reached the point that it did not deserve.

Senator Ishaq Dar also shared the details of a session with Governor State Bank of Pakistan Jameel Ahmed, on prioritizing imports in the country. The Central Bank issued a guideline to the commercial banks yesterday, to facilitate the imports of essential items like food, medicine, industrial raw materials and machinery, especially for the exported units.

The Finance minister is hopeful that soon, Pakistan’s forex and remittances portfolio would improve. He clarified that Pakistan’s debt-to-GDP ratio was 72 percent which was lower than many countries and this suggested a comfortable situation. A situation that would most likely not lead to a default.

As per Ishaq Dar, the main reasons behind the pressure on the availability of dollars is that dollars, wheat and fertilizers are being smuggled to a neighboring country. Meanwhile big stocks of wheat and fertilizers were being imported which were provided to the people at a very subsidized price. This cost the government of Pakistan a lot.

Our law enforcing agencies are showcasing a tough reaction to the smuggling and would control it, he said. He said that recent floods had also left serious challenges for the government.

He assured that the agreement with the IMF would be successfully signed. It was only the PML-N governments who always successfully dealt with the IMF. “We have brought the IMF back in six months,” he commented.

The Government was trying to provide possible relief to the people. Soon the Inflation would start to come down and the balance of payments would also be rectified, along with taking steps to bring down the current account deficit of the country.

He showed his confidence that Pakistan’s capital market would progress.

The Finance and Revenue Minister said instead of looking outside sources like the Paris Club, “Our ultimate goal should be strengthening our domestic capital market and making the best use of indigenous resources.”

He said the government was also working on launching more Special Economic Zones and strengthening the agriculture sector to keep intact the food security of the country, rather than going for surplus.