The top financial official of a country needs to be careful and responsible every time he or she opens their mouth. Finance Minister Ishaq Dar’s recent remarks are a case study in what should be avoided especially as there is a history of his remarks causing a run on the market. In 1998, the Nawaz Sharif government in which Dar was Finance Minister had frozen private citizen’s dollar accounts following Pakistan’s nuclear tests.
This time round, when Dar issued a statement that Pakistan’s foreign exchange reserves stood at $10bn — a much higher number than the central bank’s reserves of $4.5bn — as ‘dollars held by the banks also belonged to the country’. This statement fuelled rumours that the declining SBP forex reserves may force the government to confiscate private foreign currency accounts to avert a default. Dar was soon forced to issue a clarification.
As an editorial in Dawn noted, “that the minister’s irresponsible statement was enough to fuel panic even without the opposition twisting his words cannot be ignored, especially considering his track record. The freezing of the private foreign currency accounts during his first tenure as finance minister was a blunder that left public confidence severely shaken. Even if he doesn’t plan to freeze private dollar accounts, Mr Dar’s obsession with a strong rupee and management of the exchange rate at the cost of the country’s IMF programme is exacting a steep price. When he said at the presser that the next tranche from the IMF has been delayed due to the differences over revenue collection, it was but a half-truth. His management of the foreign exchange market that has created a wide gap between the interbank and open market dollar rates is an even bigger issue. It is time Mr Dar learnt to unlearn what he has believed until now. And he should stop making irresponsible public statements.”