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Steps taken to halt rupee depreciation: Dar

Steps taken to halt rupee depreciation: Dar

WASHINGTON: Finance Minister Ishaq Dar has disagreed with the suggestion that pressures on the Pakistani currency could result in higher inflation in the country.

Talking to Pakistani journalists in Washington, Mr Dar said the government had already taken steps to prevent further devaluation.

In its annual report on the world economy, the International Monetary Fund warned on Tuesday that “past currency depreciation and reduced energy subsidies will likely result in higher inflation” in Pakistan.

The IMF also pointed out that Pakistan’s newly-elected government had a mandate to tackle large fiscal and external deficits, “which will initially weigh on growth”.

The report, however, noted that reforms in Pakistan’s energy sector, combined with relatively stable worker remittances and agricultural production and support from international and bilateral donors, were expected to support growth over the medium-term.

The finance minister, who is in Washington to attend annual meetings of the World Bank and IMF, said that the government has not imposed any new taxes and blamed the caretaker government for promising to the IMF to impose more taxes.

Resultantly, the tax to GDP ratio stands at 0.75 per cent and the taxes are Rs200 billion in total, he said. He also added that the last governments left no money in the treasury, or his government would not be facing this problem.

He rejected the perception that prevails in Pakistan that the government takes directions from the IMF. “The IMF does not regulate Pakistan’s economy,” he said. The finance minister emphasised that the government plans to follow a more aggressive macro economic programme, which includes expanding the tax base.