Pakistan swaps 7 finance ministers since 2018, economic crisis deeper

In April 2018, Miftah Ismail took charge as Pakistan’s Finance Minister. Within two months, Ismail got replaced by Shamshad Akhtar in June. In the same year, Pakistan got its third finance minister–Asad Umar. The country has seen four more finance ministers in the coming years. 

Every minister comes with the claim to fix the economic collapse but the problem manifolds when someone tries to fix it. Pakistan recorded a new high in inflation as it went to 41.54% on a year-on-year basis for the week ended on February 23. 

The price of petrol has also been moved up to ₹272 per litre after an increase of ₹22.20, to appease the International Monetary Fund (IMF) for unlocking the critical loan tranche, hours after unveiling a tax-loaded ‘mini-budget’.

Prime Minister Shehbaz Sharif-led Pakistan government has been trying to increase the country’s foreign exchange reserves, which currently stand at $3.25 billion as of February 17. However, the delay in the revival of the $6.5 billion International Monetary Fund (IMF) program has made it difficult for the government to achieve this goal.

The country has been tweaking its financial policies to get the IMF deal with the introduction of a mini-budget, according to which, sales tax has now been increased to 25% and a rise in excise duty for foreign travel.

The central bank of Pakistan has also raised interest rates by 2% or 200 bps, as the South Asian nation faces pressure to mend its finances while seeking a $1 billion loan from IMF. The next meeting of the central bank’s monetary policy committee is scheduled for March 16.

Pakistan has got support from three countries Iran, China, and Uzbekistan. Iran is promoting trade with the crisis-hit country and has set up six border markets, while China has lent $700 million. Uzbekistan has signed $1 billion trade deal with the country.