ISLAMABAD: Pakistan is ready to share details of the debt related to the China-Pakistan Economic Corridor (CPEC) with the International Monetary Fund (IMF), and the decision to approach the Fund was taken after consultations with friendly countries, said Finance Minister Asad Umar on Saturday.
Umar, however, rejected the US State Department’s statement, suggesting that the debt accrued on CPEC projects was to blame for the country’s current economic crisis.
He was speaking at a press conference in Islamabad on his return from Indonesia where he requested IMF’s Managing Director Christine Lagarde for a bailout package.
The IMF, he said, had asked for details of loans, including ones secured in relation to the CPEC projects, for analysing the debt sustainability.
Pakistan, the minister said, would share “normal debt-related information about CPEC with the IMF”.
Reiterating that the government had decided to approach the Fund in consultation with friendly countries, he said that talks with these countries were still under way.
Unlike 2013, said the minister, the global environment was not favourable to Pakistan that was why the government thoroughly deliberated upon this matter before approaching the IMF.
The IMF team, Umar said, was scheduled to arrive in Pakistan on November 7 to negotiate the programme, likely to span over a three-year period.
He said that Pakistan was facing a financing gap of $12 billion this year, adding that this gap would not be bridged by IMF alone.
“We will turn to friendly countries again if the IMF terms are unacceptable to Pakistan during talks on the programme,” he asserted.
The minister said that he had been contending for quite some time that economic conditions could lead to national security issues and the government would not compromise on matters of national security.
The minister also said that Saudi Arabia, China and the United Arab Emirates had not placed tough conditions for bailing Pakistan out.
But he declined to cite specific reasons why these countries had not provided any financial assistance to Pakistan.
Umar said that the matter of obtaining oil on deferred payment from Saudi Arabia was still “on agenda and no final decision has been taken yet”.
The United States on Friday said that it would examine closely Pakistan request for a loan from the IMF, adding that “part of the reason that Pakistan found itself in this situation is Chinese debt”.
According to the finance minister, the US had only 16.5 per cent voting rights and the decision on Pakistan’s request would be taken by the IMF’s executive board with a 51 per cent majority vote.
“I hope that the IMF charter will prevail” while deciding on Pakistan’s request, he said.
Categorically rejecting the US assertion that the country was in an economic mess because of the CPEC-related debt repayments, Umar said that over the next three years, such repayments amounted to just $300 million a year, which “is very nominal against $9 billion of total debt repayments payable during this fiscal year alone”.
He said that this situation had also been explained to IMF Managing Director Christine Lagarde and the US undersecretary of state.
“The terms of Chinese loans are attractive,” said the minister.
After Pakistan decided to seek IMF’s help, the central bank devalued the local currency by 7.2 per cent that many viewed as a prerequisite for an IMF bailout package.
Admitting that devaluing rupee was a conscious decision of the State Bank of Pakistan (SBP), he insisted that he did not give any instruction in this regard to the central bank.
Citing the PTI manifesto, Umar said that determining the currency exchange rate was the job of the central bank and there would be no political interference in this matter.
The value of rupee, he said, would continue declining until economic fundamentals improved. He said that the country could be managed without the IMF, but it would be more painful for the country.
The IMF, he said, had not raised the issue of corruption in CPEC projects.
Answering a question, the minister said Prime Minister Imran Khan had “never said before the [general] elections that Pakistan will not go to the IMF”.
“I was clear that we need a bailout package either from our friends or from the IMF,” he said.
Without disclosing exact numbers, Umar said that Pakistan’s net foreign currency reserves were far below than the current gross level of $8.3 billion.
The minister said that one of the reasons for widening current account deficit was increase in crude oil prices. He said that the global environment was increasingly becoming unfavourable because of the ongoing trade war between China and the US, and the US sanctions against Iran.
Responding on why the government took six weeks for deciding to go to the IMF, the minister said that even the experienced PML-N government had taken three months to sign a deal with the IMF.
The minister agreed that the IMF programme would carry adverse implications for lower and middle-income groups.
When asked to comment on IMF’s assessment about a double-digit inflation and lower than three per cent economic growth, Umar said that it was just an IMF hypothesis and it would be discussed once formal programme talks began.
“Pakistan cannot afford to bear huge economic losses and privatisation is not a solution to these economic ills,” he said.