KARACHI: Renowned economist Dr Ashfaq Hasan, has warned that the current situation of the country pose grave threat to the economy, and Pakistan would have to approach the International Monetary Fund (IMF) for loans.
Talking to local media, Hasan said that Pakistan does not have any money to pay of its debts, meanwhile predicting that the local economy will suffer further till September.
The statement followed Moody’s Investors Service (“Moody’s”) report, which on Wednesday changed the outlook on Pakistan’s rating to negative from stable and affirmed the B3 local and foreign currency long-term issuer and senior unsecured debt ratings.
The decision to change the outlook to negative is driven by heightened external vulnerability risk. Foreign exchange reserves have fallen to low levels and, absent significant capital inflows, will not be replenished over the next 12-18 months. Low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks
Meanwhile, the country’s external account continued to deteriorate amid higher import bill and slow foreign inflows, and posted a record current account deficit of about $16 billion during the first eleven months of current fiscal year (FY18).
Hasan was of the view that we should aim to reduce the value of dollar in Pakistan, which has rose significantly in the past several days. Restrictions should be imposed on the imports of luxurious items, whereas, extraordinary measures have to be undertaken to increase its exports and reserves.