Talks with IMF end without ‘breakthrough’

Finance ministry says both sides discussed ‘challenges to regional economies in the wake of climate change’

ISLAMABAD:

Pakistan and the International Monetary Fund (IMF) did not announce a breakthrough in their talks on Monday as was evident from the fact that no date was announced for the mission’s crucial visit to Islamabad despite both the sides terming their first face-to-face meeting in four months “positive”.

The purpose of the meeting was to reach a consensus on the measures that would ensure the negotiations for the 9th programme review. But surprisingly, the finance ministry tweeted that Finance Minister Ishaq Dar and IMF Mission Chief Nathan Porter “discussed challenges to regional economies in the wake of climate change”.

Sources from Geneva told The Express Tribune that Pakistan would have to take certain measures before the IMF sent a staff-level mission. Last week, Prime Minister Shehbaz Sharif had announced that the IMF team would visit Pakistan in three days for programme negotiations – a deadline that has already passed.

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Dar met Porter on the sidelines of the International Conference on Climate Resilient Pakistan in Geneva, according to the finance ministry. It added that they “discussed challenges to regional economies” in the wake of climate change. “The finance minister reiterated the commitment to complete the Fund programme,” it said.

There was no one from the finance ministry to assist Dar at the talks with the IMF. Instead, the meeting was attended by Economic Affairs Minister Sardar Ayaz Sadiq and Economic Affairs Secretary Kazim Niaz. Under the rules of the business, the IMF is the subject of the Finance Division.

Reuters quoted Thanos Arvanitis, the deputy director of the IMF’s Middle East and Central Asia department, as saying that “it was a good meeting but I do not have any statements to make”.

A Pakistani delegate said that the IMF mission would soon visit Pakistan but the country would have to show progress on things that were already under discussion. “The IMF team does not make any fresh demand,” according to a source familiar with the discussions.

The government is already in the process of promulgating a presidential ordinance to impose taxes. The Federal Board of Revenue (FBR) has sustained Rs218 billion shortfalls in taxes during December.

The IMF has withheld the release of $1.1 billion loan tranche due to disagreement over the exchange rate policies, power tariff and a major gap in the fiscal framework. The gross official foreign exchange reserves slipped to a nine-year low of $4.5 billion last week – enough to finance three weeks of imports.

The finance minister said last week that nearly $6 billion of private commercial banks’ reserves also belonged to Pakistan. However, the central bank has already borrowed $5 billion out of the $5.8 billion held by the commercial banks as of November 30, 2022.

The UK encouraged Pakistan to continue its macroeconomic reforms and conclude the 9th review of the IMF programme. UK Development Secretary Andrew Mitchell said that it would be much easier for the world to help Pakistan “if Pakistani taxpayers are seen to be playing a core part in this effort”.

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Contrary to this, the Pakistan Mulsim League-Nawaz (PML-N)-led government gave Rs40 billion tax concessions to the traders – its traditional vote bank.

While speaking to the press after the first session, Prime Minister Shehbaz Sharif on Monday asked the IMF for a pause in its demands for economic reforms. Shehbaz said he was trying to persuade the IMF to give Islamabad some breathing space as it tackled the “nightmarish” situation.

“Even before these floods hit Pakistan, we were already facing humongous challenges”, said the prime minister. He added that Pakistan was trying to revive the programme. He stressed that Pakistan was complying with the IMF’s conditions “as best as possible” but asked how on earth the additional burden could be shouldered by the country’s poorest.

“Yet we are committed to the IMF’s programme. We will do everything to comply with the terms and conditions. Though I am constantly trying to persuade them: please give us a pause,” he said. At the end, the prime minister said that Pakistan would comply with the IMF programme.