The finance minister “refutes” the rumours, clarifying that there is no such move
Finance Minister Ishaq Dar on Wednesday denied speculation that the government was planning to freeze foreign exchange held by commercial banks.
“Engagingly” denying the rumours, the finance minister clarified that there is no such move under consideration.
Through his Twitter handle, the finance minister wrote: “National foreign exchange reserves always include foreign exchange held at [State Bank of Pakistan] SBP and commercial banks.
He noted that recently, he quoted the amount of foreign reserves based on this principle.
Dar’s statement comes days after he had said that Pakistan’s foreign exchange reserves stood at $10 billion and not $4 billion, as $6 billion held by commercial banks also belonged to the country.
The comment caused mass hysteria among depositors who thought it could be repeated in 1999 when the government seized dollars held by private banks.
The finance minister, without naming the Pakistan Tehreek-e-Insaf (PTI), accused the party of destroying the country’s economy in the past, adding that some “vested evidence” gave his comments a deliberate twist and launched a campaign as if was the government was considering accessing foreign exchange it held with commercial banks.
Dar argued that the currency held by commercial banks is “indeed the property of the citizens”.
“Therefore, the propaganda which is said to be misconstrued, misconstrued and bad faith, should be ignored,” he said, reiterating that Pakistan is moving towards improving its foreign exchange reserve position in the near future.
Foreign reserves held by the central bank fell to their lowest level since April 2014, reaching $5.577 billion on December 30, 2022, compared to $5.822 billion on December 23, 2022.
Pakistan will have to repay about $8.3 billion in the form of external debt service in the next three months (January-March) of the current fiscal year.
The government hopes to pass the International Monetary Fund’s (IMF) ninth review to secure a $1.7 billion rescue package, but both sides have made little progress in recent days.
“Everything is resolved
The finance minister also addressed the issue at a press conference along with Prime Minister Shehbaz Sharif and other members of the federal cabinet, Dar clarified that before 1999, every cent that came into the country was deposited in the central bank and private banks did not have the right to keep it dollars.
“In February 1999, when I was finance minister, we devised a system whereby a significant amount of [dollars] remains in [private] banks. It was on June 30, 1999 that the reserves were allocated into three columns – those with the SBP, commercial banks and the total.
“Whenever Pakistan’s reserves are mentioned anywhere in the world – a survey or a document – the [total amount] is mentioned and then an analysis is given. I also gave an analysis,” he added.
The minister said: “Some had worsened the country’s situation to the extent that it had slipped from the 24th largest economy in 2016 to the 47th.”
“Even now, they cannot tolerate any good developments. They gave such a twist [to my remarks],” he said, adding that while the federal cabinet was busy working for Pakistan under Prime Minister Shehbaz, such people were spreading rumors that the government would get dollars from commercial banks.
“Nothing like that will happen. Everything is ready […] and in order. Nothing to worry about,” he assured, urging those “spreading rumours” to play a positive national role.