Ishaq Dar vows to tame inflation, cut interest rates

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Dar IMF

Says rupee is ‘undervalued’; No one will be allowed to play with Pakistani currency

The new finance minister, Ishaq Dar, said on Wednesday he would work to rein in inflation while cutting interest rates, saying the rupee was undervalued and promised a strong response to the South Asian nation’s worst economic crisis.

In his fourth time in the job, the chartered accountant is facing a balance of payment crisis, foreign reserves that cover barely a month’s imports, historic lows in the rupee, inflation exceeding 27% and the aftermath of devastating floods.

“We will control inflation,” Dar told reporters in televised comments after he was sworn in. “We will bring interest rates down,” he said. He did not explain how he would tame price pressures while also cutting rates.

Dar also had a warning for currency market speculators, saying that the Pakistani rupee was undervalued. It has weakened more than 30% against the US dollar so far this year.

“Our currency right now is not at the place where it should be, it is undervalued,” said Dar, who is known to favour currency market intervention to keep the rupee stable.

“I hope the speculators will stop. I think they have already got it and we are seeing the rupee rising,” he added. “No one will be allowed to play with the Pakistani currency.”

The country’s sovereign dollar-denominated bonds fell to record lows on Wednesday, signalling growing fears of a default.

A member of parliament’s upper house, Dar got the job after his predecessor, Miftah Ismail became the fifth to quit the post in less than four years, amid persistent economic turbulence.

The rupee has been gaining firmly ahead of his appointment and stocks responded positively before Wednesday’s swearing-in.

In 2017, he had been facing corruption charges he says were politically motivated, but last week an anti-graft court suspended warrants for his arrest, enabling his return. On Wednesday, the court extended the suspensions. “I told the court that my passport was revoked,” Dar said. “I wasn’t able to travel for the last four years,” he added, describing the legal action against him as political victimisation by the previous government of Imran Khan. Khan’s party denies this.

Newly appointed Finance Minister Ishaq Dar on Wednesday decided to reshuffle the economic team. The major changes will be made in important positions in the FBR and the finance ministry, while the special assistant to the finance minister will also be reshuffled.

The Minister of State for Finance, Dr Aisha Ghaus Pasha is also likely to be sacked, and the Secretary to the Ministry of Finance, Hamid Yaqoob Shaikh will also be replaced, sources added.

He said it was because of the efforts of former Finance Minister Miftah Ismail that the country averted default. He however said that the mess left behind the PTI government could not be cleared in six months.

Ishaq Dar regretted that the PTI government during its last days in office violated the international agreements to take political mileage.

As regards the case against him, Ishaq Dar said it is a fake. He said he has been a consistent tax payer over the last thirty-four years and that he never delayed his tax returns. He said the previous government also cancelled his passport and it was the current coalition government which issued him a passport.

Earlier, Finance Minister Ishaq Dar, who returned to the country two days ago, surrendered himself on Wednesday before an accountability court in Islamabad in the assets beyond means case.

Dar was accompanied by Interior Minister Rana Sanaullah and PML-N leader Tariq Fazal Chaudhry and judge Muhammad Bashir heard the case.

During the proceeding, the judge questioned where he has been all these times. Dar answered that he was out of the country for medical treatment and his passport had been cancelled, therefore, he could not return.

The court remarked next hearing will be conducted on the warrant dismiss plea along with the NAB’s assets reference.

Afterward, the court issued notice to the NAB and sought a detailed answer by October 7.

 

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