Thank you for joining us a lot to get through this hour. Let’s start with that quote rising food prices rising fuel prices, Pakistan needs help fast. The government then open to buying oil and wheat from Russia. Correct?
Finance Minister Miftah Ismail:
We have talked about buying wheat from Russia. The previous government talked about buying oil from Russia but I think Russia has UN sanctions that they have not responded to the letter written to them by the previous government but we’ve actually asked either Ukraine or Russia whichever country can sell wheat we’d be happy to buy wheat from them.
Becky Anderson:
So oil is out of the question. Is that what you’re telling me? Russian oil is out of the question.
Finance Minister Miftah Ismail:
The previous government wrote a letter to Russian Federation. That letter was never responded to. Russia has also not offered us any oil and it’s now under sanctions. So it has really made it very difficult for me to imagine buying Russian oil.
Becky Anderson:
There are other countries who are buying Russian oil, India, for example, your neighbor so would you be open to buying Russian oil, cheap Russian oil at this point?
FM:
If Russia were to offer us oil at a cheaper rate, and if there were no sanctions on Pakistan to buy Russian oil then sure we’d consider that but at this point, I think that it would be not possible for Pakistani banks to open LCs or arrange for buying Russian oil, and nor for that matter Russian Federation offered to sell us any oil.
BA:
Would you buy in rubles out of interest.
FM:
We don’t have any rubles. So I don’t really know. Pakistan doesn’t have any rubles , I guess you know, perhaps we could exchange it for some other currency. But like I said, that’s the secondary thing. First, the Russian Federation has to agree to even sell the oil to us which they haven�t.
BA:
Let’s talk about what’s going on in the economy because you know your needs for cheap wheat if that’s what it is from Russia, your need for cheap oil if that were to be what it was, from Russia is clear. At this point, Your party orchestrated a vote of no confidence on the grounds that the former prime minister was mishandling the economy. I just want you to take a listen to this short excerpt from our interview with Imran Khan last week, have a listen.
Former PM IK:
My responsibility is for the well being, we have 50 million people living below the poverty line. So when Russia offers us 30% discount on oil and 30% discount on wheat imports. India does the same. India imports India’s part of the quad part of the strategic alliance with the US India imports oil from the US but for some reason this was taken against me as if I was being anti US or anti American.
BA:
Now what you’re suggesting that you will do and given an opportunity is quite similar to Imran Khan’s plan. So that begs the question, How can you be so critical of him?
Fin Min:
Well, first of all, Russia neither offered a 30% discount on oil or on wheat. That’s the mean, that’s, just declare I’m not aware where he gets these numbers from but I know that he just makes up stuff as he goes about. He’s the guy who’s also saying that you know, we were brought into power by an American conspiracy, and now he’s come up with this new thing. If Russia was offering cheap oil or wheat, Why didn’t you buy it? He did not. The fact of the matter is that our government has initiated that these are trying to initiate talks to buy wheat because food is not under sanctions but oil is under sanctions, and Russia has not even responded to a letter that was written to them by the Imran Khan government. So I don’t really get the 30% number from but this is just really not true.
BA:
How are you going to fix this economy and what is the current state of negotiations with the IMF?
Fin Min:
We had talked with the IMF in Doha recently. And we are talking to the IMF and in particular, I think IMF is looking to the budget that I’m going to present in the early part of June to Parliament and after that I hope, I’m hoping that we will reach an agreement with the fund. What IMF is looking for us to do is to reverse the subsidies on oil and petrol and diesel in particular that the previous government had given. It’s also looking for me to reverse some power sector subsidies, electric tariffs subsidies. that the previous government had done in contravention of its own agreement with the Fund and then it’s looking to the budget that I will present. And so I am pretty confident that we should be able to get an agreement with the Fund, but that there will be some austerity in the budget some measures to increase taxation in the next budget.
BA:
Why was it such a difficult decision to raise fuel prices when you must have known that Pakistan could not afford those subsidies that have been placed on fuel prices by the previous government? When do you plan to remove them? And will that be enough? Do you believe to get this IMF deal over the line?
Fin Min:
Well, I mean, like I said, I mean that’s the first thing that we need to do is to reverse those fuel subsidies and power subsidies and then also, there are certain budget numbers that I think that IMF is probably hoping to see. Why was it difficult because this was done precisely to set the trap for us. Imran Khan, in the waning days of this government did a few things to violate all these agreements with the IMF, including giving these unsustainably high subsidies on fuel, on diesel and petrol and also on power, electricity. And he knew that we couldn’t sustain this. And when we came to power, he’s now you know, going from city to city, you know, trying to rally the people and coming up with these theories about conspiracies and all that stuff, and putting a lot of political pressure on us. So a new government coming into power was finding it difficult to raise the prices right away But we did we have taken a very important step last week
BA:
The conceit of his argument is that the economy was actually in relatively good shape And he quoted a number of growth statistics to me to substantiate that. I want to pull up some numbers your foreign exchange reserves dwindling down almost a third from the start of the year, the rupee down 11% of the dollar in the same time, the question must be what is your government doing and planning to do to stop the rot? I mean, the current relationship with the new government and nations like China, Saudi Arabia and the UAE, who in the past would have stepped in to help surely is so important at this point. I wonder what those relationships are like?
Fin Min:
Well, I think we have very good relations with all the three countries that you name it, plus a lot of other countries and the Prime Minister’s flying to Turkey even as we speak, and Imran Khan had damaged relations with China. He rolled back the CPEC China Pakistan Economic Corridor, I think he’s also annoyed Saudis and the UAE governments, but we’re trying to repair relationships with them, as well as all the western countries who are the biggest importers of Pakistani goods, US and the EU markets. And this is the comity of nations that we want to be a full member of and we don’t wish to annoy countries for our political benefits. So we are trying to repair relationship but in order to bring Pakistan’s economy back on track, number one, you know, decisions have to be made in Pakistan and no country can really bail us out unless we decide to. Unless we decide to have a disciplined program and live within our means.
BA:
Imran Khan says that your government is a puppet government of the United States and he says that he has evidence to substantiate that although as yet that evidence isn’t in the open. It isn’t open to the public. Do you believe that that evidence exists? Are you a puppet government of the United States?
Finance Minister:
If you knew the history of Imran Khan and all the things that he said in the past and he backtracked and all the accusations that he made in 2013. Every time he loses an election he makes an accusation about stuff. This man just like I said makes up facts you know as he goes along, and today it’s a conspiracy. I mean, and by the way, I mean, the no confidence motion was filed on I think 08 of February or something like this, and the vote took place in early April. And he didn’t think of the conspiracy till the 27th of March
BA:
Let me ask you this question when the certainty provided by elections, saw all of this out and be ultimately better for the economy going forward. I mean, this is a country. Every country many countries are struggling with inflation at the moment the economies of many developing nations are particularly badly hit. As a result, the Ukraine war, Pakistan is one of the most vulnerable of developing countries to rising commodity prices. The certainty of a new election, sir, surely would be better for the economy at this point, wouldn’t it?
Fin Min
There’s an argument about like that, that is made within our coalition within our party, both of our former prime minister the leader of our party, Nawaz Sharif was also of the opinion that we should go into an election sooner rather than later in a few weeks. But then when we came into power, the economy was such in a precarious position That it was important that we take these measures we couldn’t even wait for a caretaker government because in Pakistan we can�t hold the elections in elect elected government cannot hold the election. We have to go to an interim government for three months. And IMF will not make a deal with an interim government. So only we could make a deal for one year I extended the program or requested the IMF to extend the program by one year. So here I mean, if the economy were not in as bad a shape as it is if they were not as precarious the position, of the current account deficit have not increased, foreign exchange reserves have not decreased so rapidly, We would have gone into an election but Imran Khan has left economy in a such doldrum that we have no choice but to now stabilize the economy and go in election.
