MNAs term IMF loan deal unrealistic, anti-poor

Question conditions imposed by lender, suggest adjustment of targets

Shahbaz Rana September 18, 2019

ISLAMABAD: Pakistan’s parliamentarians belonging to three mainstream political parties have plainly told the International Monetary Fund (IMF) that its $6 billion loan programme is unrealistic, anti-poor and could undermine the country’s sovereignty.

Members of National Assembly, elected on tickets of Pakistan Tehreek-e-Insaf (PTI), Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP), suggested to the IMF that in order to complete the 39-month programme, the “unrealistic targets” had to be reset in light of economic realities in Pakistan.

An IMF delegation, led by Jihad Azour, Director for the Middle East and Central Asia Department, held first face-to-face meeting with the National Assembly Standing Committee on Finance at the Parliament House on Tuesday. Former finance minister Asad Umar chaired the meeting held behind closed doors.

Azour and IMF’s Washington-based mission chief to Pakistan Ernesto Rigo are on a four-day visit to Pakistan to hold discussions on recent economic developments, future outlook of Pakistan’s economy and the government’s performance against the agreed programme targets.

“We have told the IMF regional head that its programme was unfeasible, undesirable and put a disproportionate burden on the poor,” said PML-N MNA Dr Ayesha Ghaus Pasha after the committee meeting.

She went on to say that the IMF programme was killing both the economy and the people due to harsh conditions.

Owing to the IMF’s programme, living conditions were deteriorating and inflation was skyrocketing and yet the government would not be able to achieve many unrealistic targets, said Pasha, the former finance minister of Punjab.

The IMF was of the view that things were broadly in the right direction, said Umar after the meeting between the parliamentarians and the IMF delegation. He said the IMF team also showed satisfaction over the government’s performance including in the area of revenue collection. Members of the standing committee aired concern about the consequence of the IMF programme, said Umar.

One of the strongest comments was made by PPP’s Dr Nafisa Shah. By imposing conditions related to the China-Pakistan Economic Corridor (CPEC) and Financial Action Task Force (FATF), the IMF had undermined Pakistan’s sovereignty, said Shah after the meeting.

During an interaction with media persons, Azour did not respond to the question regarding parliamentarians’ reservations about Pakistan’s sovereignty due to the IMF conditions related to CPEC and FATF. The IMF has imposed general conditions pertaining to accumulation of external public debt and issuance of fresh sovereign guarantees, which have made it impossible to undertake projects like the $9 billion Mainline-I railway project of CPEC.

Dr Nafisa Shah said the IMF programme stoked inflation due to a steep currency devaluation and increase in prices of gas, electricity and other utilities. The standing committee members asked questions about currency devaluation, hike in interest rate, low investments due to the IMF conditions and the business coming to a standstill. The IMF defended programme targets and did not respond to the questions raised by the committee members in detail, said PML-N MNA Sheikh Qaiser Ahmad.

“We told the IMF that its tax collection target of Rs5.5 trillion was unrealistic,” said Ahmad. He said if the IMF still insisted on achieving the target, it may lead to introduction of a mini-budget.

The members also raised questions about the lack of growth in exports despite 34% currency depreciation in the last fiscal year under the IMF condition, said Ahmad. But the IMF defended its conditions about the interest rate and currency devaluation, he added.

“The IMF programme cannot be successful and is bound to fail due to unrealistic targets,” he remarked. Under the IMF programme, the government had reduced education and health spending and yet the IMF director insisted that the $6 billion package protected health and education expenditure, said Ahsan Iqbal, former federal minister for planning, after the meeting.

“The IMF programme can only be successful if it gives more weight to direction instead of periodic targets,” remarked a committee member. In his view, it was very difficult to achieve the Rs5.5 trillion revenue target - a fact the FBR had also admitted recently. The legislators also raised questions about implications of the under-estimated fiscal deficit in the last fiscal year, which eroded the base for the current fiscal year’s target.

Published in The Express Tribune, September 18th, 2019.

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