Kya PDM Hukoomat Mein IMF Pakistan Ko Default Karta Dekhna Chahta Tha ?Miftah Ismail
Kya PDM Hukoomat Mein IMF Pakistan Ko Default Karta Dekhna Chahta Tha ?Miftah Ismail
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00:00Before I come to you, I want to hear a statement from Mr. Ishaq Dar, who is accusing the IMF of a huge crime in the context of the PDM era.
00:09If you remember, last year I was in power for 16 months.
00:14Last year, I was in power for 11 and a half years.
00:17So, they were reviewing us. Why weren't they reviewing us?
00:20Believe me, my assessment is they wanted Pakistan to default.
00:24Mr. Ismail, do you believe that the IMF wanted Pakistan to default in the last PDM government?
00:33No, the IMF never wanted Pakistan to default.
00:39This was discussed at the time when Mr. Dar was the Minister of Treasury.
00:45And when this was not happening, that they were talking about nuclear assets and other things.
00:53The IMF understands Pakistan really well.
00:55God forbid, if anyone talks about nuclear assets, they don't talk to the Finance Minister.
01:00And neither did they ever talk to him.
01:02And when Prime Minister Shahbaz Sharif went to Pakistan in June,
01:09he completed the negotiations with the IMF in one or two days.
01:15Here, the interest rate increased by 1% and the deal was done.
01:18So, really, no. I don't think the IMF wants Pakistan to, God forbid, go bankrupt.
01:24I don't think anybody really wants Pakistan to go bankrupt.
01:28Our friends don't want it, our enemies don't want it either.
01:31And we shouldn't even imagine, God forbid, that Pakistan will default.
01:35Mr. Mufti, this statement is coming from Mr. Dar at such a point
01:39where our proper finalization of the next program of IMF has not been possible.
01:44Will this become a threat for us?
01:47Because even before this, because of Mr. Dar's statements, there has been some confusion in the past as well.
01:52No, no, no. This will not become a threat.
01:54The IMF and all this, look, their staff is sitting there, they monitor all the newspapers.
02:00Their mission chief keeps looking at the Pakistani newspapers first.
02:05They also understand Pakistani politics and they know this.
02:09If Mr. Dar had been the finance minister and then he would have been talking about this,
02:14then it would have been difficult. But now, because he is not the finance minister,
02:17I don't think it will be difficult for him.
02:20The reason for the delay by the IMF is completely different.
02:23It has nothing to do with this statement.
02:25My simple question is, is this the reason for not being the finance minister of Mr. Ishaq Dar?
02:31That such a statement should not be made and then there should be no confusion.
02:34Look, you will have to ask the Prime Minister.
02:39You have been a part of his cabinet, I know you know the inside out, Mr. Mufti.
02:44No, no, but I think I cannot really speak to why he decided not to make Mr. Dar the finance minister.
02:51Only the Prime Minister can answer this.
02:54And look, a lot of people give political statements against the IMF.
03:02I don't think that requires a real program of the IMF.
03:06But if you are following the program or not, if you have stopped the dollar,
03:11if you are not letting the dollar trade in the state bank,
03:14if you are doing other things, it makes a difference.
03:17And I think the last time it made a difference with those things.
03:20After that, we saw that in February, March, April, May, there was a lot of inflation in Pakistan, 35%.
03:26And then the Prime Minister went to the program in June.
03:32I don't know the reason, but I don't think statements like this make a difference.
03:39Hopefully not.
03:40Hopefully not, yes.
03:41But one more issue that we have seen, Mr. Mufti is giving a positive outlook.
03:46Just guide us through whether this is a positive outlook or not.
03:49Inflation has come down.
03:50The chances of lowering the interest rate are getting very strong.
03:54And inflation has come to the lowest of the last 36-38 months.
04:01In single digit as well.
04:03Is this a glimpse of long-term relief?
04:07Or is this a short-term issue?
04:10No, no, I think this is a real difference.
04:13Look, in December 2021, the price of oil was $71.
04:20The price of Brent oil was $71 in December 2021.
04:25After that, oil prices have gone up.
04:28When the PDM government came, there was a war between Ukraine and Russia at that time.
04:35Oil prices went up to $105, $108.
04:38When oil is expensive, when international oil is expensive in Pakistan,
04:42petrol and diesel prices are expensive in Pakistan.
04:45The downstream prices are higher.
04:48Now that it is getting cheaper, it is cheaper.
04:50And you have seen that 9% or 9.5% interest rate has increased.
04:55Inflation rate has increased.
04:56And it is obvious that the government has increased electricity prices a lot.
05:01Gas prices have increased a lot.
05:03That unaffordability is still there.
05:05And when we are saying that inflation has decreased,
05:07we are not saying that prices have decreased.
05:09We are saying that the speed of prices increasing has decreased.
05:12But anyway, the increase from 35% to 9% has become very easy.
05:17Now the need is that the state bank should reduce interest rates immediately.
05:21At the moment, the interest rates in Pakistan are 10% in the real term,
05:25excluding inflation.
05:27So, they are the highest in the world in Pakistan.
05:30So, it is necessary to reduce it.
05:31If interest rates decrease,
05:32unemployment will increase very fast.
05:34Poverty has increased very fast.
05:36Today, more than 10 crores of people are living under poverty in Pakistan.
05:4040% of Pakistan's population is living under poverty.
05:43Electricity prices are low.
05:44So, if interest rates decrease a little,
05:46the factories that are closed will start opening.
05:49Or investment will start happening in Pakistan.
05:51Mr. Iftad, there is another flip side to this.
05:54When inflation increases, interest rates are increased to reduce it.
05:58Now that inflation has decreased,
05:59if the government wants to reduce it further,
06:02to increase its political leverage,
06:04to benefit from the decrease of inflation to the grassroots level,
06:08at least there should be a feeling among the people
06:10that inflation has really decreased,
06:12and cheapness has started happening,
06:13or at least the sign of inflation has started decreasing.
06:15So, it will be difficult to reduce the interest rates further.
06:19It will be a matter of danger.
06:20Do you think that if you think politically,
06:23the government will want the interest rates to decrease?
06:28Look, I think the government thinks politically.
06:31I don't think it thinks about Pakistan's long-term economic interest.
06:36But the truth is that right now,
06:40the real interest rate in Pakistan is 10%,
06:45which is the highest in the world.
06:47And if you reduce it by 3-4%,
06:49then the government's debt servicing becomes very low.
06:53I think there will be about 60-70 lakh rupees left on every percent.
06:57So, if the government reduces the interest rates by 3-4%,
07:02then the government's loss will be reduced,
07:04which will actually reduce inflation further.
07:06Because if the government's loss is reduced,
07:08then they will have to borrow less money.
07:10And right now, along with inflation,
07:13look, there were two big global economies in Pakistan.
07:15One was that inflation was very high,
07:16and unemployment was also increasing.
07:18Now that inflation has decreased a little,
07:20because oil has decreased in the global market around the world,
07:22then you should take advantage of it.
07:24And if you reduce the interest rates here,
07:26then there will be a reduction in the unemployment that is spreading.