Twitter feud between Ishaq Dar and Hammad Azhar over T-Bills auction
Inflows tended to increase after July 2019, when the interest rate in Pakistan was raised to 13.25 percent per annum.
”Building Forex reserves by selling T-Bills at an exorbitant rate of 13.25% is suicidal and unsustainable”- Ishaq Dar
”It seems like good news coming from the economy of Pakistan is making someone uncomfortable”- Hammad Azhar
The current government of Pakistan has been very excited about the sharp increase in foreign inflows into T-bills.
According to the latest data released by State Bank of Pakistan (SBP), the participants bid Rs407.49bn for three-month, Rs118.08bn for six-month and Rs622.19bn for 12-month papers, of which it accepted Rs156.85bn, Rs5.88bn, and Rs183.85bn respectively.
Moreover, against the target of Rs 300bn, the government has raised a cumulative sum of Rs 398.44bn.
Ishaq Dar VS Hammad Azhar:
Recently, there was a twitter feud between the ex-Finance Minister Muhammad Ishaq Dar and Muhammad Hammad Azhar, the current Federal Minister for Economic Affairs over T-bills auction.
Ishaq Dar posted that the move of the PTI government of raising dollars by selling T-bills at the interest rate of 13.25% is not beneficial for Pakistan from a future prospect. He further said that it is like a ”suicide to increase foreign reserves in this pattern”.
PTI Government is raising dollars by selling T-Bills at an exorbitant rate of 13.25% which is unprecedented in the history of Pakistan. Building forex reserves on this pattern is suicidal and unsustainable.
— Ishaq Dar (@MIshaqDar50) December 8, 2019
In response to his tweet, Hammad Azhar replied that it seems like good news coming from the economy of Pakistan is making someone uncomfortable.
He further added, “Taking CA deficit to $20 bn from $2.5 bn, Depleting Forex Reserves to Half in 17 months, resorting to Expensive Commercial Loans & Killing exports was suicidal. The real rate of interest is + by just 1% now”.
Taking CA deficit to $20 bn from $2.5 bn,Depleting Forex Reserves to Half in 17 months,resorting to Expensive Commercial Loans & Killing exports was suicidal.
Real rate of interest is + by just 1% now.
Looks like positive news coming from the econ is causing discomfort to some. https://t.co/3pKf6r56Nn
— Hammad Azhar (@Hammad_Azhar) December 8, 2019
When we look at the statement of Ishaq Dar, he is not entirely wrong about the way the government is increasing foreign reserves. The interest rate that the government has fixed is very high.
It should also be kept in mind that the situation could change quickly, and reverse flow can also happen.
However, the current government is left with no other choice to take some bold steps. As we know, the current foreign reserves of Pakistan are not satisfactory. Moreover, the present government is doing everything possible to improve the current economic standing.
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