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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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April FDI in Pakistan increased to $358.8 million, according to SBP

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The inflow for April was $358.8 million, up 177% from $132 million in April FY23. Still, that was 39% more than the $258 million from March.

China was the largest investor, with $439.3 million in FDI from the nation between July and April of FY24—the greatest amount—as opposed to $604 million during the same period of FY23. In April, China accounted for $177 million of the total investment.

With $51.93 and 51.89 million invested in Pakistan, the United Arab Emirates and Canada came in second and third, respectively.

The power industry was the main draw for foreign investors in FY24, which ran from July to April. This period’s FDI in the power industry was $637.5 million, compared to $776.2 million the previous year. From $338 million to $460 million this year, Hydel Power garnered more attention.

Continue reading: In FY23–24, Pakistan’s per capita income increased to $1680.

According to a separate data released on Wednesday, Pakistanis’ per capita income increased to $1680 in FY2023–2024.

The size of the national economy grew from $341 billion to $375 billion in the current fiscal year, according to figures made public by PBS.

Throughout this fiscal year, Pakistanis’ yearly per capita income increased by Rs 90,534; the monthly rise was Rs 7,544.

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OGRA forbids the purchase or sale of inferior LPG cylinders.

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The 313 LPG marketing and 19 cylinder-producing companies received notices from the OGRA, which described the act of refilling inferior LPGO cylinders as harmful.

Avoid supplying LPG to unlicensed distributors, the OGRA has cautioned LPG marketing companies. Only approved distributors will be able to sell and buy LPG going forward, per the notification, which states that new SOPs have been developed for the LPG industry.

Additionally, the warning said that the decision was made in an effort to preserve both lives and the business in response to an increase in cylinder blast occurrences.

Price reductions of Rs 20 per kilogramme for liquefied petroleum gas (LPG) were implemented in Quetta on May 3.

There is a reduction of Rs 20 on LPG prices, which means that the price per kilogramme drops from Rs 280 to Rs 260.

The costs of LPG were reduced by Rs 20 per kilogramme earlier, bringing the total decrease to Rs 40 per kilogramme over a few weeks. This is something worth noticing.

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PIA announces a significant student discount.

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According to an airline spokesman, the national flag carrier has recently raised the baggage allowance to 60 kg.

Currently, PIA flies one flight per week on Sundays between Islamabad and Beijing.

The discount may be useful to students who intend to spend their summer vacations in Pakistan or who wish to return home after earning their degrees.

Before, students who wanted to visit China could now receive a 27% reduction on their fares through PIA.

On Eid ul Fitr, the national flag airline also reduced the cost of domestic flights by 20% for both economy and executive economy classes.

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