The government doesn’t intend to seize foreign currency stocks held with commercial banks, according to ISHAQ Dar, which should put an end to widespread rumours that he ever intended to “freeze” individual Americans’ dollar accounts as he had done in the wake of US sanctions following Pakistan’s 1998 nuclear tests.
Days prior, the finance minister claimed that Pakistan had $10 billion in foreign exchange reserves, far above the $4.5 billion in reserves maintained by the central bank since “dollars held by the banks also belonged to the country.”
This had stoked speculation that, in order to prevent a default, the government could be forced to seize private foreign currency accounts due to the SBP’s dwindling FX reserves.
He gave the people his assurance that nothing of the sort would occur. He went on to explain that it was customary to include a breakdown of the foreign exchange held by commercial banks as well as central banks in the national foreign exchange reserves.
Speaking beside the prime minister at a press conference, Mr. Dar claimed that those responsible for the nation’s economic collapse over the previous four years had twisted his words. There is a good chance that the opposition would distort his comments in a way that would be detrimental to the administration.
But in recent weeks, many people have emptied their bank accounts as a result of the country’s rising dollar shortage and the withdrawal of foreign money from the market. It is impossible to overlook the fact that the minister’s careless statement caused concern even without the opposition distorting him, especially given his track record.
When the private foreign currency accounts were frozen during his first term as finance minister, it was a mistake that seriously damaged public trust. Even if Mr. Dar doesn’t want to block individual dollar accounts, the cost of his obsession with maintaining a strong rupee and managing the currency rate at the expense of the nation’s IMF programme is high.
He only told a partial truth when he indicated at the press conference that the disagreements over revenue collection caused the IMF’s next tranche to be delayed.
Even more of a problem is his administration of the foreign currency market, which has led to a significant difference in dollar rates between the interbank and open market. It is time for Mr. Dar to learn to unlearn his previous beliefs. He should also refrain from making careless public pronouncements.
