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Finance Minister Muhammad Aurangzeb has announced that no complaints have been received regarding the opening of Letters of Credit (LCs), and no foreign company has been hindered from repatriating its profits. He emphasized that these factors indicate there is no pressure on the currency.
Speaking during a briefing to the Senate Standing Committee on Finance in Islamabad, the Minister affirmed the government’s full commitment to the International Monetary Fund (IMF) program. He highlighted that stable growth typically follows the successful completion of IMF programs.
The Minister explained that the IMF program, spanning three years, sets the stage for sustained economic stability. Reflecting on past policies, he noted that the “growth accelerator” was pressed three years ago.
Reiterating his points, he emphasized that no complaints have arisen about the inability to open LCs, and foreign companies continue to freely repatriate profits, underscoring the currency’s stability.
During the session, State Bank Governor Jameel Ahmed expressed confidence that the current account would remain in surplus for the fiscal year. He highlighted a 10-12% increase in exports and projected that remittances would reach $35 billion. He further mentioned the global oil price decline to $70-75 per barrel as a positive factor for the economy.
Recalling recent economic challenges, the Minister noted that at the start of last year, Pakistan faced severe financial difficulties. However, after the February 2024 general elections, the coalition government initiated an IMF-backed loan program. This involved implementing heavy taxation in the energy sector and undertaking structural economic reforms.
Today, Pakistan’s economic indicators show marked improvement. Inflation has dropped to a six-and-a-half-year low, foreign exchange reserves stand near $12 billion, and remittances are expected to hit $35 billion this fiscal year. The IT sector’s robust export growth has provided additional support to the economy.
The Minister credited these improvements to bold economic reforms and tough decisions, which have garnered recognition from international research organizations. Economic conditions in 2024, he concluded, are significantly better compared to previous years.
Senator Saleem Mandviwalla, Chairman of the Senate Standing Committee on Finance, has firmly stated that local purchases will not be allowed to be paid in dollars, emphasizing the need for legislation to prevent such practices if necessary.
Highlighting his concerns, Senator Mandviwalla criticized dollar payments for local transactions, pointing out that banks are earning millions of dollars through Visa and MasterCard. He estimated that approximately $1 billion is being paid annually for these cards.
During a briefing to the Finance Committee, Finance Minister Muhammad Aurangzeb and State Bank Governor Jameel Ahmed faced scrutiny from PTI senators. Mohsin Aziz questioned the feasibility of achieving economic growth while remaining under the IMF program. In response, the finance minister explained that exports would be increased incrementally, with a target of reaching a 6% growth rate in three years.
Shibli Faraz rejected the Finance Minister’s claims, labeling the growth program as faltering. The Minister, however, maintained that reductions in interest rates have provided substantial relief to the industry, with tangible results expected within two to three months.
The finance minister also attributed the decision to cut off gas supplies to captive power plants to the previous PTI government. Meanwhile, the State Bank Governor outlined policy measures to enhance priority financing, reporting that the current account deficit has been in surplus so far this year.
Shibli Faraz challenged the surplus claim, prompting the Governor to explain that national exports have increased by 10-12%, and remittances are projected to reach $35 billion this year.
Senator Mandviwalla raised concerns about a bank remitting $2.5 million weekly during a critical shortage of dollars. He criticized the allowance given to Visa and MasterCard to collect dollars from rupee accounts, asserting their control over the country’s ATMs. He questioned why the State Bank had not taken action to restrict this practice.
Addressing the issue, the State Bank Governor said progress had been made, with payments to cards reduced from $1.4 billion in 2022 to $800 million following the imposition of a $30,000 limit. He also mentioned the introduction of a domestic PayPal card in Pakistan.
Senator Mandviwalla argued that local cards are rarely used and expressed concern about the potential for dollar payments for rupee withdrawals from local ATMs.
