Pakistan facing real risk of default: Shabbar

Our Correspondent
Saturday, May 14, 2022

ISLAMABAD: Former FBR chairman Shabbar Zaidi has said that Pakistan is facing a real risk of default in the next fiscal year if the country does not take the required steps to curtail imports of goods and services in the range of $7 billion.

He proposed a number of drastic steps including rationing of petrol and diesel for over 2000cc vehicles, closing down all shopping malls, and bazaars at 6:00pm, and traveling abroad by utilising dollars.

He said that those should be allowed to travel abroad, such as for performing Umra or Ziarat on frequent basis, who could arrange financing for purchasing tickets outside the country in order to save dollars.

"The risk of default may loom large in fiscal year 2023, so there is a need to curtail imports of both goods and services in the range of $5 billion and $2 billion respectively. Without saving dollars, we cannot avert default risks," the FBR ex-chairman said when The News contacted him on Friday.

In his tweet on Friday, Shabbar stated, “When six months ago, I said the country is bankrupt, everybody criticised me. Now everything is clear. Our ancestors made this country & we will save it. I will soon give a comprehensive political, socio-economic roadmap for Pakistan. Just be honest”.

When this scribe contacted him on Friday night, he said that the economic challenge arose when the country's current account deficit was envisaged in the range of $7 billion for the current fiscal year but now it was projected to go up to $17 billion at least by the end of the current fiscal year. He was of the view that he had analysed the situation six months back that the country’s trade gap on account of rising imports would become a challenge but nobody paid heed to it.

He said that Pakistan's imports of $70 billion on account of goods is not sustainable, so there is a need to bring it down in the range of $60 to $65 billion. There is an urgent need to restrict the imports by $5 billion on immediate basis. On the other hand, the country's imports of services stands in the range of $12 billion, so it should be reduced by $2 billon. "In totality, Pakistan needs curtailment of imports in the range of $7 billion in order to avert risk of insolvency on external account obligations," he maintained.

The country's sustainable level of import of goods should be maintained at $65 billion maximum and imports of services up to $10 billion and beyond these levels the risks of default would become imminent.

On exports, he said that the country's exports could not go beyond $40 billion in four years period. So the strategy, he said, should be focused on curtailing imports on an immediate basis. He said that politicians found it hard to implement such harsh decisions because they were themselves enjoying all such luxuries of life through imports. But now there is a need to come above petty politics and save the country from default, he concluded.