Former finance minister Ishaq Dar is living in exile in the UK these days. Dar, who managed Pakistan’s economic affairs from 2013 to 2017, is considered by his supporters to have been one of the best finance ministers the country has ever had, while his detractors have accused him of artificially maintaining the economy by taking on excess debt, throwing the country into a debt trap.
After Nawaz Sharif was thrown out of office and the invisible forces started registering cases against the former prime minister’s Pakistan Muslim League-Nawaz (PML-N), Dar chose to go into exile, as he believed that the invisible forces were controlling the proceedings and were victimizing Sharif and his close aides. This correspondent interviewed Dar on Sunday evening.
Q: How do you see Pakistan Tehreek-e-Insaf’s 2018-19 budget ? Also, how would you answer the PTI’s allegation that you were maintaining the economy artificially?
A: There is no concept of maintaining an economy artificially in economics. You probably can do it for a week or 10 days but not more than that. You cannot get international institutions like Standard & Poor’s and Morgan Stanley to praise your economic progress for money. I am a strong believer in not devaluing the currency, and now the textbook economists in Pakistan are agreeing with me. The PTI has devalued the Pakistani currency by 48% and the exports saw no growth because these masses were thrown into price hikes. Due to devaluation, the debts of the country have swollen to $30 billion. The PTI government has failed miserably in presenting a balanced budget because it was not prepared for it. Devaluing money and imposing taxes on the already financially weak masses will not improve anything.
Q: The PTI government blames the PML-N for the current economic turmoil and alleges that due to the poor economic policies of the PML-N and Ishq Dar, Pakistan is going through its current economic turmoil.
A: This is very irresponsible of PTI. The truth is that PTI was not prepared for governing the country and they actually had no knowledge of how economies work. In 2013, when we took charge of the country, I as a finance minister did not waste time in accusing the previous government of giving us a weak economy. Instead, we were ready to take on the economic challenges. When we came to power the stock exchange was at 19,000 index points and when we left the index points stood at 54,000. This did not happen by itself. We amended the old corporate law and merged the different cities’ stock markets into the Pakistan Stock Exchange. We worked on the betterment of economic indicators and as a result, investors showed confidence and it ultimately resulted in the growth of the Pakistan Stock Exchange.
Q: Do you agree that the current PTI government surrendered to the International Monetary Fund’s terms and conditions, even though your government also took a loan from the IMF?
A: Look, I never let the IMF dictate to us. I was always against the devaluation of our currency. During negotiations with the IMF, the officials from the IMF tried to convince me to devalue the currency. The moment they asked me to devalue the currency I stood up and said, “I can’t do it, thank you very much for your time,” and I left the room. In the end, I was able to convince IMF officials that there was no use in devaluing the money. The IMF officials put pressure on you, but if you cannot resist that pressure for the sake of your country, then you are certainly not the right person to do the job of governing the country.
Q: PTI’s finance adviser, Hafeez Shaikh, is an experienced person, so why is he not being able to correct the errors in the domain of economics?
A: During the years 2010 to 2013, Pakistan’s economic condition was very poor and at that time the same person, Hafeez Shaikh, was the finance minister of the then PPP government. He was not able to revive the economy at that time, so how can he do it for the incumbent government of PTI? Perhaps Imran Khan can answer [that question] better. What changes has he seen in the person whom he once held responsible for Pakistan’s economic woes?
Q: You and your government were able to bring massive investments, so why is PTI not able to do that?
A: There are a few contributors that are needed to bring direct investments. First is a stable currency. If an investor knows that he can earn a profit of 15% to 20%, but due to the devaluation of the currency his profit will shrink only to 5% or 7%, why would he invest in such an environment? The other factor is political stability, which is missing in Pakistan. The third factor is the economic indicators. When JETRO [Japan External Trade Organization] saw our economic performance it stated that Pakistan is the second-best potential location for foreign direct investment. Our closing of foreign direct investment was US$284.9 billion and the PTI government has brought it to $1.376 billion, which means a huge decline in direct investments. When your GDP has fallen to the lowest in South Asia and the country is going through a phase of political instability, how can foreign investment come? I think only charity can come under these circumstances.
Q: Do you think that unnecessary criticism of the China-Pakistan Economic Corridor (CPEC) by the PTI during its opposition tenure led to the slow pace and almost nonexistent investment in CPEC?
A: The biggest blunder by PTI was that it created a false narrative both in the parliament and outside the parliament that CPEC was not a direct investment and instead it was a loan taken by the PML-N government at an 8% interest rate. CPEC investment was $46 billion initially and it was then increased to $56 billion. Out of that, $34 billion was for the energy sector, where the government of Pakistan had not needed to borrow even a single penny as the private energy companies were required to invest. Only the Sindh government was a partner with Angro, a private company, for a small amount for the Thar-Coal project. A $6 billion loan was taken for a railway upgrade which never was utilized, $3 billion for the Lahore to Karachi motorway’s Sakhar section, and $3 billion for the Gawadar port development. $10 billion was added later for the Karachi circular railway and for smaller dams in the province of Khyber Pakhtunkhwa. After that, China has not invested anymore and China cannot be blamed for that. No country can invest when even the investment is being termed as a loan and politicized for political gains.
Q: Do you think with no vision of the economy and with a masses-unfriendly budget that the incumbent PTI government will be able to complete its term, and will it be able to get the budget approved by parliament?
A: I think the budget will be passed with the help of “invisible forces”; however, I do not see this government ruling for a long time as they have no clue of handling the economy. The devaluation in currency leads to inflation and inflation leads to price hikes. The inflation will rise to 13% next year and these vicious circles will grow bigger. Venezuela is an oil-rich country but it is financially destroyed because of devaluation. For me, devaluation is the mother of all evils.
Q: Do you think you were punished by the invisible forces like former prime minister Nawaz Sharif? As finance minister were you of the view that non-productive expenditures should be curtailed?
A: Of course, I was of the view that every institution should work in its legal framework and not intervene in the elected government domain. I tried to tell the powers that be that the bigger our economy will be the bigger the share of cake they will get. I, along with my party, the PML-N, was victimized for not giving an extension to the then chief of army staff, General Raheel Sharif. It was me who, along with Shahbaz Sharif, went to meet General Raheel Sharif and told him that our government was not giving an extension to him. Soon after refusing the extension scandals like the Dawn leaks and the Panama leaks emerged and were used tactically against us.
Q: PTI is assembling a commission to establish where the loans taken during the last 10 years by the PML-N and PPP government were spent. What is your view on this?
A: The PTI government does not even know about the concept of the loan. This is a waste of time. The loan is not rocket science. The deficit in the budget is always filled by borrowing and every government does it. I will welcome it if an international expert should be asked to join this commission as it will be more effective. Let’s find out which government launched the megaprojects in return for loans and who are currently wasting the loans. We have no fear as we spent each and every penny on the development of the country.
You might also like: Pakistan’s current social order must not prevail
Imad Zafar is a columnist/commentator for newspapers. He is associated with TV channels, radio, newspapers, news agencies, and political, policy and media related think-tanks.