US likely to release $981m by June-end: Hafeez Shaikh

Published: April 27, 2011
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Finance minister says IMF help sought to get budgetary support funding resumed.

Finance minister says IMF help sought to get budgetary support funding resumed.

ISLAMABAD: 

United States is expected to release nearly $1 billion to Pakistan before the end of June, a senior official said on Tuesday. Though the money will help bridge the country’s soaring budget deficit, it is still well below Islamabad’s expectations.

On Tuesday, Finance Minister Dr Abdul Hafeez Shaikh said that during his recent talks in Washington, the Obama administration had pledged to release a sum of $981 million by the end of the current fiscal year.

During a press conference after his US visit, Shaikh said the US had assured it would also release an amount of $381 million of the Kerry-Lugar money. This would be the first major chunk the US would give Pakistan through the government channel. Besides, on account of the Coalition Support Fund (CSF) Washington would release another $500-$600 million – an amount that the US would pay in return for Pakistan’s services in the war on terrorism. Under a five-year Kerry-Lugar aid package, the US had assured that it would give $1.5 billion per annum to Pakistan. However, since 2009, the US has disbursed only $359 million through government channels – putting a big question mark over US intentions of delivering on the $1.5 billion-per-annum promise.

On November 15, former US special envoy to Pakistan and Afghanistan Richard Holbrooke had pledged to fast-track the release of $500 million from the Kerry-Lugar funds to help the flood affected population.

But the US only released $190 million, remaining unfaithful to Holbrooke’s promise. Pakistan had hoped to get $1.5 billion by June 30 under the CSF but so far the US has disbursed $744 million and Islamabad’s expectations to get additional $600 million still fall short of government projections.

For the current fiscal year the government is expecting a budget deficit of 5.3 per cent of the national income which is estimated to be Rs907 billion, the finance minister said.

Shaikh said the IMF has also agreed to send a mission in the first week of May for the fifth review of Pakistan’s economy. The review is a prerequisite for the release of the withheld tranche of $1.7 billion under the suspended bailout programme. The minister said Pakistan is satisfied with the outcomes of the recent talks held with the IMF at the side line of the Spring Meetings.

Shaikh said Pakistan has sought the IMF’s assistance to get the suspended budgetary support funding amounting to $1 billion resumed from the World Bank and the Asian Development Bank.

Answering a question he said economic reforms are in Pakistan’s interest, adding that the cut in government size and an increase in revenues would help the government sustain the progress made so far and would put the country on the  growth trajectory.

“I acknowledge that a lot of work has to be done but at the same time there is a need to build up on the progress made so far,” Shaikh said. Pakistan, according to him, is well positioned to restrict the budget deficit to 5.3 per cent of the total national income by the end of June.

Speaking on the challenges resulting from next year’s budget, the finance minister said the foremost challenge would be to maintain economic stability. After that, he said, the next challenge is to ensure benefits of growth to the masses and tackling the energy crisis. In the next budget, he said, the government would ensure targeted subsidies, while electricity subsidies would be given to lifeline consumers.

Speaking on the occasion, Federal Board of Revenue chairman Salman Siddique said that the IMF appreciated Pakistan’s arrangement with the industry regarding two sales tax rates.

Published in The Express Tribune, April 27th, 2011.

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Reader Comments (22)

  • KR
    Apr 27, 2011 - 8:02AM

    How long are we going to rely on foreign aid and IMF loans, there is absolutely no way that we as a third world underdeveloped country can ever pay any of these loans back. Our politicians have already stole everything from Pakistan including our dignity but now as a last resort they are now stealing from the future generation. And for once please don’t blame India or America for our own corruption and lets be responsible and try to work together to find long term solution.

    Begging for loans and aid is certainly not the answer……….and remember when you keep taking 10% at a time very soon there will be nothing left. For the sake of our country let’s try to change Islamic Republic of Corruption back to Islamic Republic of Pakistan and be proud of something after all not all of us can afford to go in self impose exile. Recommend

  • John
    Apr 27, 2011 - 8:11AM

    I wish the finance minister all the luck on the earth. Recommend

  • Moise
    Apr 27, 2011 - 8:57AM

    Economic hit-man from IMF. Enforcing Washington consensus even though most of the world rejecting it:

    Here are the IMF recommendations:

    Banks control the money supply
    Dont support local businesses with subsidies
    Tax more
    More intrest rates
    Devalue currency with reserve currency
    Freehand to foreign product dumping and restrictive patents
    Free flow of capital in and out
    National assets to be sold to foreigners
    Deregulation of everything so companies can do whatever they want
    Bankers can get your tangible assets like house, factory, land

    Pretty much handing Pakistan sovereignty for few billion dollars.

    What is the alternative?
    Beijing Consensus:

    No interference by foreign state
    Build infrastructure
    Build industries
    In return for raw materials access

    If any Allah fearing Muslim from Government is reading this please pass it on and do something about it, the current finance minister is a banker from WorldBank and has his employe interest at heart.Recommend

  • pakdoc
    Apr 27, 2011 - 8:58AM

    this article brought tears to my eyes. Soon pakistani currency will be devalued by min 10 % to 20 %Recommend

  • fahim
    Apr 27, 2011 - 8:59AM

    So pak ready to receive another “aid”… what a shame to beg money everywhere, all the time. Imagine the pakistanis in US meeting other citizens whose tax money is getting wasted this way. I am sure offshore pakis are equally shameful in front of other citizens from other countries. Recommend

  • Ashraf
    Apr 27, 2011 - 11:59AM

    Stop paying the salaries of the military and the spooks. They are not doing their jobs right.Recommend

  • dextor
    Apr 27, 2011 - 12:38PM

    Mr Sheikh…Is this your success story as finance minister…….I rhink its shamefull….Recommend

  • Iftikhar-ur-Rehman
    Apr 27, 2011 - 12:40PM

    wishful thinking!!!!!!!!!!!! or is it my hopes my dreams come true?????Recommend

  • VKT
    Apr 27, 2011 - 1:29PM

    Getting loans and aids is not a good news for a Sovereign country like Pakistan but instead of knowing its bad impacts on our economy, our Government always proudly announces as like We have got success in convincing IMF & World Bank for getting Financial assistance and etc, Although i understand our country can’t function without their assistance because of corruption and anomalies but we need to be extremely serious on this issue. Foreign assistance can only supports temporary but not permanently. Now Government should need to try to not asks for financial assistance from IMF & World Bank for some time and lets c its impact on our economy and political scenario specially from opposition parties which always blames and hates ruling government. Give a try Mr. Finance Minister…you are doing nice job..All the Best!!!Recommend

  • KM
    Apr 27, 2011 - 2:08PM

    US knows that you live on such outstanding payments, funds and donations, to balance your budget. They know that you walk a thin line with respect to managing your balance of payments, and they very well know how to play with you. As a finance minister you should have focused on bigger payments that these petty fries … A few days here n there, you will screw up the image of Pakistan in the international arena.Recommend

  • Asif
    Apr 27, 2011 - 2:22PM

    God knows, when will we stop begging for aid :S

    I would be v v happy if US doesnt release this aid. As only then we will try to take some serious measures for economy. As long as we keep running after aid, we wont be able to do anything for the financial mess we are in.Recommend

  • Apr 27, 2011 - 2:42PM

    Start paying your taxes and remmit money to Pakistan through legal channels. If not, then stop complaining about the state we are in. The IMF is a lender of last resort, which means that after knocking every other door, and getting rejected, the government of Pakistan ends up at the IMF. Why do you expect them to give us any freebies? Recommend

  • Hedgefunder
    Apr 27, 2011 - 2:58PM

    Well at least the US felt sorry and is willing to release these funds, as there are too many reasons at present for them or any other organisation not to release any funds at all, until such time that there are actions taken to arrest the problems and answers provided for the many questions raised! That too without deceit and lies and with transparency!!!Recommend

  • Zahid Hussain Khalid
    Apr 27, 2011 - 4:24PM

    I think that most appropriate action on Tribune’s part will be to create a platform for sharing unique ideas to revive Pakistan Economic Sovereignty.

    The participants may be invited to come up with ten immediate measures that come to their minds for the revival of:

    A: Pakistan’s 8 to 10 percent GDP growth

    B: Confidence of overseas Pakistanis who have the capacity and the know-how to invest in
    Pakistan.

    C: Confidence of local investors who are fed up of corruption, load shedding, law and order
    situation, extortion, economic fall out of war on terror, unregulated transit trade /
    smuggling and political uncertainty.

    D: Mobilization of natural and human resources with a precisely phased out timeline

    E: Emphasis on BOT focused projects

    F: Freeze on Car Financing, Personal Loans, Housing Loans to shift focus on public
    transport, business financing and low cost housing schemes.

    G: Media’s focus on Social Sector Development Issues on news, entertainment and youth
    channels.

    H: Community focused initiatives for self-reliance in education, development of resources
    health facilities, creation of job opportunities.

    I: Creation of platforms of Genuine Influence Groups in different Walks of Life

    J: Focus on sports for healthy body and healthy minds, dialogue on national issues to
    arrive at consensus, emphasis on social, moral and ethical values and culture of trust,
    mutual understanding, cooperation and a feeling of being part of a proud nation.

    I think once we agree on our priorities everything will automatically fall in place.Recommend

  • Cautious
    Apr 27, 2011 - 5:37PM

    I read an article recently that said that only 1% of Pakistani’s pay income tax – if that’s true then you don’t deserve any aid.Recommend

  • Apr 27, 2011 - 9:00PM

    Till today USA owes Pakistan approximately over $50billion due to total “economic” losses incurred by Pakistan when it helped USA win the Cold War and now for 10 years helping USA fight the War on Terror. Any good Pakistani accountant can give you details of this which may come out even higher due to inflation and loss of interest for the last 30 years.Recommend

  • Hedgefunder
    Apr 27, 2011 - 10:12PM

    @Pervaiz Lodhie:
    LOL!!!! Keep it up! thanks for making my day!!!
    Answer me this please, did USA Force your nation or did the nation act under Duress, during the Cold War ?
    Do you actually know as to the amount in terms of Aid, Equipment and Financial Incentives that your Nation has received for the War on Terror??
    Well in regards to Accountants, it really does’nt matter as they are all same! Period.
    You mention Inflation and loss of Interest, as to what exactly is the relevance to this statement??
    I don’t recall Pakistan Loaning any funds to USA, Furthermore I thought that the concept of Interest is Haram for Islamic Institutions!!!!
    Lastly have you actually considered the Idea that your Rulers at the time and at present were and are more than happy with the funds offered by USA for the services rendered, without any consideration to its impact on the region and its people!!!!Recommend

  • Singh
    Apr 28, 2011 - 5:34AM

    Today Headline is
    US likely to release $981m by June-end: Hafeez Shaikh
    Last week news was
    Short Range N capable missile test.
    Are these test don’t cost any money?
    It is like buy a car but don’t have money for gas.
    End result zero sum.
    Wise up.Recommend

  • J.Oberoi
    Apr 28, 2011 - 7:55AM

    @Zahid Hussain Khalid:
    It is too late for all that now. These things should have been done 10 years back. Nobody knows where Pakistan is heading. Drones are being used as an excuse for all of Pakistan’s problems. Your only hope is that the Chinese will give you $20 billion in aid to bail you out. You might have to sell them Gwadar port to them. But I think it is worth it.Recommend

  • Hedgefunder
    Apr 28, 2011 - 2:13PM

    @J.Oberoi:
    Do you really think the chinese are that stupid!!! To actually pay for something they constructed and paid for too. Also there is a little matter of 25 year lease, that is currently with Singapore Port authority !!!Recommend

  • Ek Hoon Kafir
    Apr 28, 2011 - 7:15PM

    @Pervaiz Lodhie:
    A “good Pakistani accountant” can bring that claim up to $1 trillion. Just like they double-bill the US Treasury for non-existent military “operations”. Pakistani casualty figures are what the military tells us. They could be cooking up that number just like they have been making up everything else. Recommend

  • mo
    Apr 30, 2011 - 3:05AM

    @Asif:
    its not AID, its reimbursing cost of using our ports and giving them military bases , and damage to roads by NATO trucks Recommend

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