Pakistan’s finance minister says government checked currency speculation, convinced exporters to return money to country to stabilize rupee.
Finance minister Ishaq Dar on Wednesday said he was optimistic about an economic recovery after the rupee breached the psychologically important 100 to the dollar mark.
The currency had been losing its value against the greenback since Sharif’s PMLN government came to power in June last year, sliding from 97 rupees to the dollar to a low of 108 in December. Since then it has mounted a recovery and as of Wednesday evening the rupee was trading at 97.90 to the dollar.
Addressing a press conference Wednesday, Dar said: “The price of onions, tomatoes and dollars has been brought down to the level when Prime Minister Nawaz Sharif took oath. It is a positive development for the economy and will boost investors’ confidence in Pakistan.”
The finance minister said the government was not resorting to injecting reserves from the state bank in order to stabilize the currency. “We did not use State Bank money to strengthen the rupee, but persuaded exporters to bring back their money to Pakistan and checked currency speculation, which resulted in the rising value of the rupee,” he added.
Dar said that revenue from tax collection, which has traditionally been problematic, had increased by 17.7 percent and the budget deficit was down to 3.1 percent as compared to 4.1 percent in the first eight months of last year. He added that overseas remittances by Pakistanis abroad stood at $9.23 billion, representing an 11 percent growth compared with last year.
Dar said that exports have also shown a 6.2 percent growth while the rate of inflation was currently 8.6 percent. “We are on track to achieve six percent GDP growth rate in three years and Pakistan can emerge as a strong economy in the region,” Dar said.
The IMF approved a $6.7 billion bailout loan package for Pakistan in September 2013 to help the struggling country achieve economic reforms, particularly in its troubled energy sector. The IMF said Pakistan’s economy was picking up, with growth expected to reach about 3.1 percent in 2013/14 compared to its earlier estimate of 2.8 percent.
The IMF made an initial payment of $540 million, and in November fund officials said during a monitoring visit that Pakistan was “broadly on track” with reforms. In December, Pakistan received $554 million as a second tranche of the loan.