ISLAMABAD – Former finance minister Asad Umar warns of peak inflation incoming months.
Former finance minister Asad Umar said late Tuesday that according to hisassessment inflation rates would peak in the next two to four months.
In an interview with a private news channel, Umar said that after the twoto four months, the inflation rate would slowly start going down.
Responding to a question, Umar said that revenue targets affect the economyin many ways and this was a central factor that needed to be looked at.However, he added that during the period of adjustment when they(government) were getting out of a balance of payments crisis, the fiscaldeficit was not the primary factor to look at.
He explained that this was because during this time, in order to compressdemand and overcome losses in the energy system, decisions are made thatincrease inflation and to counteract that policy rates have to be increased.
“A big reason for the increase in the fiscal deficit is due to policydecisions of increasing inflation,” he said, adding that even indiscussions with the International Monetary Fund (IMF) the target focus wasthe primary deficit.
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While giving his analysis that inflation would peak over the next fewmonths and then slowly go down, Umar said that right now it was importantto pay attention to whether progress was being made on the primary deficit.He said this year there was less progress than they wanted and hoped thatnext year there would be further progress.
When asked if the (economic) situation had improved or worsened since hehad left his post as finance minister, Asad Umar said, “The directionhasn’t changed. They are still going in the same direction adopted by thePTI government from day one. There are multiple views on every individualdecision.”
He said that the overall direction was firstly to take Pakistan out of the“worst balance of payments crisis in (its) history” and noted that some“milestones” had been reached in achieving this.
