IMF refuses talks with cash-starved Pakistan

Published: February 1, 2011
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IMF refuses to send mission to Pakistan on restoring the $11.3 billion-dollar bailout package.  PHOTO: REUTERS

IMF refuses to send mission to Pakistan on restoring the $11.3 billion-dollar bailout package. PHOTO: REUTERS

ISLAMABAD: Amid a snowballing economic crisis, the International Monetary Fund (IMF) on Monday refused to send a mission to Pakistan for talks on restoring the $11.3 billion-dollar bailout package.

The IMF took the decision after Islamabad failed to hold out a firm commitment to implement tax and power sector reforms.

A pre-review IMF mission, led by its Director for the Middle East and Central Asia Department Masood Ahmed, held separate meetings with President Asif Ali Zardari, Prime Minister Yousaf Raza Gilani and Finance Minister Dr Abdul Hafeez Shaikh.

“After getting negative signals at the highest level, the IMF delegation refused to send a mission for talks with Islamabad,” a finance ministry official told The Express Tribune on condition of anonymity.

The delegation said that mission-level talks would only be held if the reformed general sales tax (RGST) was levied from March 1 and fiscal slippages were controlled. However, the government insisted that the implementation should be delayed till July.

“Pakistan had pinned high hopes on President Barack Obama’s senior adviser David Lipton, but he, too, asked the government to implement economic reforms,” said another finance ministry official who attended the talks.

Lipton had visited Islamabad last week to urge the government to carry forward the reforms agenda.

The finance ministry refused to comment on the development, terming it merely “internal talks”.

The IMF had suspended the bailout package in July last year after Islamabad failed to deliver on its promises of levying the RGST a second time.

Although the IMF extended the programme till September this year, it has refused to release the sixth tranche of $1.7 billion.

During the meetings with the president and the prime minister, both leaders are said to have insisted that the reforms agenda would be implemented once the outcome of talks with mainstream opposition parties and allies in the ruling coalition becomes apparent.

Published in The Express Tribune, February 1st,  2011.

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Reader Comments (15)

  • Feb 1, 2011 - 10:46AM

    Now how we will ask for money?? any other organization left??Recommend

  • Ammar
    Feb 1, 2011 - 11:50AM

    The funny thing is that everyone knows that Pakistan will get the money either way. If the IMF refuses then the US will put pressure on them. Pakistan is an important ally in the fight against terrorism and it’s in no one’s interest to leave it unhappy. However, the sad thing is that despite having the “upper-hand,” our shameless and power-greedy leaders will succumb to introducing any reforms suggested by external bodies/countries regardless of whether it is right for the country or not. Recommend

  • J Oberoi
    Feb 1, 2011 - 2:12PM

    @Ammar, the US never does something for nothing. The US will lean on the IMF only if two conditions are met:
    1.) Send the army into N.Waziristan
    2.) Release Raymond Davis unconditionally.
    But if both those conditions are met, there might well be a revolution in Pakistan.
    It is pretty much the choice between a rock and a hard place. Do you think the IMF is not already in consultation with the US?Recommend

  • SK
    Feb 1, 2011 - 2:42PM

    I sincerely hope that IMF, US and all other crooks stand by their words and don’t pay a penny to Pakistan. After all, ordinary citizen is already the worst hit party, what else will go wrong, it will be so called govt leaders, their families and cronies who will not be able to enjoy the money which gets siphoned off every time aid come through.Recommend

  • A Suhail
    Feb 1, 2011 - 3:26PM

    We need to impose RGST and control our expenditures. We need to raise the cash in house so we do not have to go begging to US all the time. Since US props us up they also interfere in our affairs. I hope IMF do not give us a penny so to teach our ruling class a lesson. BTW what does going to north waziristan has to do with revolution. Revolution is such an abused word in Pakistan, the word is right there with Islam, honesty, muslim umaah, caliphate, asian tiger etc etc. Revolutions do not happen when anyone is expecting they happen when no one expects it. Recommend

  • Mayet
    Feb 1, 2011 - 3:36PM

    Pakistan can get the money from ‘brotherly Saudi Arabia’, surely. That too under Islamic banking rates. No interest applies. Do not worry. Saudis are dirt rich.Recommend

  • A Pakistani
    Feb 1, 2011 - 6:28PM

    Empty pockets but loud sound bytes from Islamabad! Its high time we stand on our feet and stop begging. Any remedy?Recommend

  • Taimur
    Feb 1, 2011 - 6:56PM

    @Mayet:

    Great Idea :)Recommend

  • JihadBob
    Feb 1, 2011 - 7:15PM

    @Ammar:

    I totally agree with you. Israel was offered US$ 3 billion just for stopping the construction of settlements in certain areas for 3 months. Egypt’s national debt was reduced by half for supporting the first gulf war. They have been paid roughly US$3 billion per year for the last 20+ years just to maintain peace with Israel. We should demand our national debt be wiped to zero before we allow them to proceed one step further in Afghanistan. What will they do? Declare war on us?! They’ve already done that! And they don’t have the stomach to fight more wars and spend trillions more. Everybody at the top is going to be worried about upcoming presidential elections in the US in the next 6 months and they want to withdraw with dignity. We should give them an ultimatum that they can either totally eliminate our debt…or they can spend the next 20 years fighting in Afghanistan without any help from us. We should be willing to go to the bat for this, and I am absolutely sure that if we stood our ground, we would get what we demanded. It’s just too bad our politicians (and even the army at the top) are too cowardly, treacherous and self involved to think of the country. Recommend

  • Shahryar Ahmed
    Feb 2, 2011 - 9:59AM

    well said. I agree 100%. @A Suhail: Recommend

  • Tony Singh
    Feb 2, 2011 - 12:39PM

    @JihadBob:
    In other words BLACKMAIL. Can also blackmail by threatening to sell nukes to Iran/Noth Korea Al Qaeda, the neighbourhood Panwala if US/West/Maybe China do not pay up.
    Also can threaten to blow one (Mother of All suicide bombings) in situ. Maybe it will do the trick.Recommend

  • Altaf Khan
    Feb 3, 2011 - 4:56AM

    @J Oberoi:

    yeah operation in N.Wazirstan and releasing Ramond Davis, no wonder you are Indian, couldn’t expect anything better than you,..

    every thing needs a strategy and our armed forces has a thoroughly brainstormed road map for operating in that area!! we will do that when the time is ripe and Pentagon is on board with it,, the statements from all other officials are just an eye for terrorists and IR specialists like you !!!!

    well i am no Aafia Siddiqui fan but i guess they are going to settle the scores now!!

    and as far as revolution is concerned, the chances are 50%, 50%,, one can’t be sure we are an unpredictable nation and if there is révolution au Pakistan then it would leave behind all the revolutions and set a precedent of its own and one can’t be sure about that too as what would that be !!Recommend

  • J Oberoi
    Feb 3, 2011 - 12:31PM

    @Altaf Khan:
    I am not wishing for those things to happen. I am merely speculating on what the US would expect in return since everybody knows that the IMF is manipulated by the US. Recommend

  • Feb 4, 2011 - 12:57PM

    I don’t think Pakistan is going to find it easy to get money this time. Not with Raymond Davis in prison, Salman Taseer shot dead, blasphemy law unchanged, threats to other ministers, etc. It is one thing to explain a country as one with some extremists, it is another to justify aid to a country where a killer of a government official is publicly celebrated. Plus, it isn’t the first time Pakistan has been bending down and avoiding reform in favour of comfort.

    America has already said that the war in Afghanistan is winnable without support from pakistan. In other words, they are distancing from leverage.

    Rather than look at ways to coerce them into coughing up cash, Pakistan’s leaders must buckle up and take charge of the country they are paid to govern. Institute reforms so that the aid can be released. Eventually, it will help Pakistan recover and prevent its down slide into a financial crevasse.Recommend

  • sandemm
    Feb 12, 2011 - 8:28AM

    Let Pakistan collapse.
    Let India and USA take joint control of Pakisatn & bring it back to a secular toelrant place. The notorious religious fundamentalists who are spreading terror all over the world need to be taken out, not fed with more$$$$!!Recommend

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