Former Finance Secretary Younus Dagha, in his comments on the SBP Amendment Bill, has claimed to have made a significantly better deal with the International Monetary Fund (IMF) in 2019 than the one currently achieved. Removed from office in May 2019, Dagha claims in an interview to The News that the deal achieved in February 2019 with IMF was lost once the federal finance team was completely changed.
According to Dagha,
“The IMF was convinced for keeping the interest rate at 10.5 percent and the exchange rate was going to be adjusted gradually but then the whole economic team replaced and everything got reversed. Then the new economic team accepted everything which the IMF did not even ask during the earlier negotiation.”
However, he states, after the whole team was suddenly replaced in the middle of negotiations by the government during IMF representatives’ visit to Islamabad, including Finance Minister Asad Umar himself, this deal could not be realised. Instead, Dagha claims, as part of the new deal for the $6 billion package from the IMF, Pakistan had to settle for an interest rate of 13.25 percent and an exchange rate of 165 rupees to the US dollar. Dagha claims that this led to the spike in inflation and rises in prices for consumers which are continuing to date.
Dagha also commented on a number of economic issues in the current situation, while offering his assessment of government moves towards independence for the SBP through the amendment bill. In his view, the central bank ought to remain under federal government control like a number of other regulatory authorities, but enjoy functional autonomy. Dagha cited examples of the decisions made by the SBP counter to government preferences over the past few years, which, in his view, indicate that the central bank already enjoys independence in its decision-making.