July 22, 2024

Ministry of Finance – Government of Pakistan

Rebuttals/Rejoinders

Phone: 9211707 Director General (Media)

Explanation: Response to a News Item Written in the “Express Tribune” about TSA On December 10, 2022, a story called “TSA deadline will be missed: IMF” was published in the national newspaper The Express Tribune. The story is based on a draught report made by a team from the IMF that went to Islamabad from October 3rd to October 10th, 2022. The news story has wrong information, wrong data, and a wrong way of looking at the facts and records.

It is made clear that the Finance Division, with the help of the IMF and other international development partners, has made major changes to the way the Federal Government manages public money. One of these reform areas is the implementation of the Treasury Single Account (TSA). The IMF has been helping with capacity building, design, scope, and implementation in line with international best practices.

Ministry of Finance - Government of Pakistan

Ministry of Finance – The article also says that it is based on an IMF report that is still in draught form and that the Finance Division and the IMF are still talking about it. The IMF draught report says that the government of Pakistan has made a lot of progress on tough public financial management reforms, such as TSA. This part has been left out of the news story for no good reason.

Due to the complexity of putting TSA into action, the IMF team has come up with different models and timelines. The Finance Division is currently evaluating these proposed models and timelines with the help of everyone who has an interest in them.

Even though the government has agreed with the IMF to implement TSA, there is no deadline of December 31, 2022, for all public sector entities and the Ministry of Defense to close their commercial bank accounts and transfer their money to the State Bank of Pakistan. Also, the Government of Pakistan has never agreed with the IMF to close all commercial bank accounts that the Public Sector Entities, like OGRA and NHA, have. Also wrong is the number that says the total balance is about Rs. 2.9 trillion. Ministry of Finance

The claim that “the Ministry of Finance doesn’t know who owns 484 bank accounts” is also false and amounts to spreading false information. The State Bank of Pakistan has complete information on all the commercial bank accounts kept by federal and provincial government entities and organizations. As required by the PFM Act, 2019, commercial banks have been giving the SBP all of their data.

Implementing TSA in all of the Federal Government’s Public Entities is an ongoing process that involves a lot of discussions about scope, design, accounting, banking, and IT infrastructure. As the news story said, it has not been slowed down. Ministry of Finance

Rebuttal: A false message about supposed emergency plans for the economy has been going around on social media. In the past few days, a fake message about so-called economic emergency proposals has been going around on social media.

The Finance Division not only strongly disagrees with what was said in the message, but they also say that there are no plans to declare an economic emergency. The message, unfortunately, is meant to make people worry about Pakistan’s economy and can only be spread by people who don’t want the country to do well.

In these hard economic times, it is not in the best interest of the country to make and spread these kinds of false messages. Just reading the nine points listed in the message shows how unrealistic these ideas are. It is also not fair to compare Pakistan to Sri Lanka because Pakistan’s economy is strong and has many different parts.

The current tough economic situation is mostly caused by things outside of the economy, like the commodity super-cycle, the war between Russia and Ukraine, the global recession, trade headwinds, the Fed’s decision to raise interest rates, and the damage caused by floods that have never happened before.

Even when the economy was hurt by floods that had never happened before and the government had to meet IMF requirements, the government did everything it could to reduce the effect of these outside factors. The government is still committed to finishing the IMF program and making all payments on time for debts to other countries. Ministry of Finance

With the approval of the Federal Cabinet, the Government has put in place a number of austerity measures because the economy is in a bad place. People know that these steps are meant to cut spending on things that aren’t essential. In the same way, the government has been talking about ways to save energy, mostly to lower the cost of importing. Such talks will continue in the Cabinet, and all decisions will be made after consulting with all parties and figuring out what is best for the country as a whole.

Ministry of Finance. With the help of the current government, the IMF program is back on track, and talks for the 9th Review are well underway. Recent work by the government has led, among other things, to lower current account deficits and the meeting of FBR revenue targets. In the near future, there will also be less pressure on the external account. Even though the country will still need to make structural changes in the middle term, the economy is now moving toward stability. Ministry of Finance

Finance Division urges the people of Pakistan to help improve and stabilize the economy and not to listen to malicious rumors that are against Pakistan’s national interest.

Clarification:

An article in the newspaper “THE NEWS” by Dr. Farrukh Saleem called “Financial Emergency” overstates the economic problems the country is facing.

Ministry of Finance. The article “Financial Emergency” by Dr. Farrukh Saleem, which came out today in the newspaper “THE NEWS,” overstates the economic problems the country is facing and understates its economic strengths. The author chose data from different economic indicators that fit with his ideas and thoughts. Ministry of Finance

In particular, the article gives a less accurate, one-sided, and exaggerated picture of the problems in the external sector while ignoring the fact that many emerging market economies are also facing similar problems. Globally, rising commodity prices and a stronger US dollar have put more pressure on the external sector, which the author did not mention.

The author has done a good job of making his points by using a mix of new and older information. For example, the latest foreign exchange reserve numbers from the SBP ($8.3 billion) are mentioned, and then import numbers are mentioned in a casual way. The fact that imports have been slowing down over the past few months has been completely ignored.

Also, the current account deficit number of $17 bn (for FY22) is used to show the need for financial flows without mentioning that the same number for FY23 is expected to be around $9-10 bn by both domestic analysts and IFIs. This would reduce the gross financial requirement by over $7 bn.

The article also only talks about the outflow side of the external accounts (payments for imports, debts, etc.) and completely ignores the positive growth of exports, strong remittances, foreign investments, and expected inflows in FY23. Pakistan’s exports and money sent home from abroad add up to more than $ 60 billion per year.

Ministry of Finance. Pakistan has finished the 7th and 8th reviews of the IMF’s Extended Fund Facility. These reviews were done at the beginning of September 2022. This shows trust in the government’s will and policy initiatives to deal with problems in the external sector. In accordance with the IMF programme, foreign exchange inflows are expected later in FY23. Large exports and remittance inflows will soon slow down, which will relieve pressure on the external sector.

The government is sure that Pakistan will be able to meet its financing needs and build up its foreign exchange reserves to cover more than two months of imports over the next few months.

Lastly, the government has said it will stick to strict fiscal discipline, and the fiscal deficit for FY23 is expected to stay below Rs 5 trillion, even though the devastating floods have caused problems for the economy. The article tries to make people worry about things that don’t need to be worried about by saying that the fiscal deficit will be Rs 6 trillion.

There are rumors on social media that the government has borrowed money from the State Bank of Pakistan (SBP) Ministry of Finance.

A rumor is going around on social media that the government borrowed money from the State Bank of Pakistan (SBP). This is completely false and shows how little people understand how money works. As shown in the monetary tables (M2), the government’s budgetary borrowing from the SBP is equal to the difference between the stock of government borrowing from the SBP and the stock of government deposits with the SBP. So, the number for net borrowing could change because of changes in the cash balance with SBP and other accounting rules. This change is not a new budgetary loan from the SBP to the government. Instead, it is just a change in how much cash the government has with the SBP.

Government is still committed to meeting its obligations under the new SBP Act and the conditions of the IMF program. The government has not taken out any new loans from the SBP. In fact, the government has been paying off its debts with the SBP as they come due. Ministry of Finance.

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