Crunch talks on stalled IMF programme today

Fund says MD Georgieva spoke to Shehbaz on prime minister’s request

ISLAMABAD:

The International Monetary Fund said on Sunday that the recent telephone call between Prime Minister Shehbaz Sharif and its Managing Director Kristalina Georgieva took place at the request of Pakistan, as both sides were expected to sit across the table in Geneva on Monday (today) to “discuss outstanding issues”.

An IMF delegation would meet Finance Minister Ishaq Dar on the sidelines of the Geneva conference, aimed at gathering international support for Pakistan in the aftermath of devastating floods last year, on January 9 (today), a spokesperson for the lender said.

On Friday, an official handout, released by the Prime Minister Office after Shehbaz’s speech in Hazara read that “the IMF managing director called Premier Shehbaz on the phone”. During a speech, the prime minister had also claimed that the IMF managing director had contacted him.

However, the IMF representative in Pakistan told The Express Tribune that the call was initiated at the request from Shehbaz. “The call took place in response to a request by the prime minister of Pakistan to discuss the International Conference on resilient Pakistan”, Esther Perez, the Resident Representative of the IMF said.

Also read: PM Shehbaz affirms govt resolve to complete IMF terms

It seems the government is not yet ready to mend its ways and making questionable claims of strength despite risking sovereign default with only $4.5 billion foreign exchange reserves in hand. The remaining reserves are enough to finance only three weeks of imports.

Pakistan’s three months (January-March) debt repayments stand at $8.5 billion. This includes $2 billion to the United Arab Emirates (UAE) that the government is trying to get rolled over. Such factually incorrect statements might create problems for Pakistan, given a long history of mistrust between two sides.

Pakistan has been in difficult relationships with the IMF due to its habit of making promises at the time of getting a loan tranche, but then abandoning those promises once the tranche was disbursed. This had created a wide gulf between the two sides.

A spokesperson of the IMF in a statement to media also said that “The Managing Director had a constructive call with Prime Minister Sharif in the context of the International Conference on Resilient Pakistan to be held in Geneva on Monday, January 9”. She also supported Pakistan’s efforts for a resilient recovery, it added.

In his speech on Friday, the prime minister had also claimed that an IMF mission would come to Pakistan in two to three days. “I asked her [the IMF MD] to send IMF team for the completion of the pending 9th review of the programme so that the next loan tranche is released,” Shehbaz had said.

Also read: Friendly countries won’t help if we ditch IMF: Sana

“She assured that the mission will visit [Pakistan] in the next two to three days,” the prime minister had added. However, after Shehbaz’s speech, the finance ministry sources had said that no dates for the IMF review mission had been finalised yet.

In its statement to the media, an IMF spokesperson said on Sunday that the IMF delegation was expected to meet with Finance Minister Dar on the sidelines of the Geneva conference to discuss outstanding issues and the path forward”. The statement did not indicate that the 9th review Mission will arrive in Pakistan.

The Express Tribune had reported on Saturday for the first time that Pakistan’s official foreign currency reserves had slipped to a dangerous $4.5 billion level because of major debt repayments. Pakistan is keen to complete the 9th review so that the World Bank and Asian Infrastructure Investment Bank (AIIB) may also release their loans.

The 9th review talks have been pending since October last year, resulting in the withholding of a $1.1 billion loan tranche. The prime minister had also said that Georgieva enquired whether or not China and Saudi Arabia were supporting Pakistan.

Read Also PM in last-gasp bid to revive IMF talks

A statement by Interior Minister Rana Sanullah confirmed that even foreign nations would not help without the IMF umbrella. “If we back out from these (IMF) conditionalities, then our economic survival will become next to impossible and even our friendly countries cannot extend financial help to us,” Rana said in Faisalabad.

The review talks are delayed because of differences over exchange rate policies, restrictions on imports, demand for imposition of additional taxes, and increasing the electricity prices to settle roughly Rs500 billion in circular debts. Rana added that if the government tried to fulfil the IMF’s harsh conditions, those would jack up inflation and price spiral coupled with an economic setback.