• 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.