Pakistan came out of financial crisis after two episodes

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ISLAMABAD: Finance Minister Miftah Ismail on Monday said Pakistan has come out of the financial crisis after two episodes of increase in petroleum prices in quick succession and hence no need of declaring an economic emergency.

The minister, however, said the prime minister would soon be announcing austerity measures to reduce government expenditure. This followed a day-on-day downward revision in the rupee’s value by Rs2.14 to Rs200.06.65 against the dollar in the interbank and rumours about an impending financial emergency on social media.

“The prime minister will at some point announce austerity measures to save government expenditures. But there is not going to be any declaration of financial emergency. Nor is there any financial emergency. After two increases in petrol prices, we are out of the financial crisis”, the finance minister said in a tweet to reassure the markets.

The government has increased by 40 to 51 percent the prices of various petroleum products since May 26 to bring back the international monetary fund to the negotiating table and scale down fuel subsidies that had climbed to Rs125bn per month following a reduction and four-month price cap announced by the previous government on February 28.

Separately, the Ministry of Finance and the State Bank of Pakistan in a joint statement also dispelled such rumours. “The government and SBP refute baseless claims circulating on social media regarding Foreign Currency Accounts (FCAs), Roshan Digital Accounts (RDAs) and Safety Deposit Lockers (SDLs)”.

The joint statement said that both the government and the central bank “assure all account holders maintaining FCAs, RDAs and SDLs in banks in Pakistan that their accounts and lockers are completely safe, and that there is no proposal under consideration to put any restriction on them”.

The statement said rumours were circulating on social media that the government or State Bank was considering freezing or placing restrictions on withdrawals from FCAs, RDAs and SDLs. “Such rumours are absolutely incorrect and baseless,” the joint statement said, adding that ‘such a proposal has neither been considered presently nor in the past.’

The joint statement assured the account holders that foreign currency accounts including Roshan Digital Accounts were legally protected under the Foreign Currency Accounts (Protection) Ordinance 2001, and the Government and the State Bank were committed to protecting all the financial assets in Pakistan including the ones mentioned above.

It said the government and the SBP were taking all necessary measures to ensure macroeconomic stability in the country. “The recent difficult decisions taken by the Government, including the reduction of subsidy on petroleum products, will pave the way to reach an agreement with the IMF and release of the IMF tranche and financial assistance from other multilateral agencies and friendly countries.

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