Dar blames ‘crises’ at home for skipping US trip

ISLAMABAD:

Finance Minister Ishaq Dar on Saturday said that Pakistan was waiting for the confirmation of $1 billion loan from a friendly country to meet a condition of the International Monetary Fund, as the government keeps dodging sovereign default through currency flow management.

Dar addressed the nation to give his stance on the decision to cancel a trip to the United States, which The Express Tribune had reported on Friday.

The minister said that he had to cancel his visit to Washington where he was scheduled to attend the World Bank-IMF spring meetings due to the prevailing “constitutional crisis” in the country.

“On the instructions of the prime minister, I have cancelled the US visit but will virtually attend the meetings where Pakistan’s participation is required,” he said. He termed the mandatory the WB-IMF meetings as “routine rituals” where long speeches are made.

Dar was scheduled to meet the deputy managing director of the IMF, Miss Antoinette Sayeh, the IMF’s director for Central Asia and Middle East, Jihad Azhor, and Mission Chief to Pakistan Nathan Porter. However, the government could not secure a meeting with the IMF managing director.

While commenting on the delay in reaching a staff level agreement with the IMF, the finance minister said that Pakistan had already done all that was required to conclude the ninth review.

The minister said that at the time of the seventh and eight reviews, two friendly countries (Saudi Arabia and the United Arab Emirates) had informed the IMF in writing about providing $3 billion loans to Pakistan.

“The two-month delay from mid-February was due to this reason,” he said. “In the past two weeks, one of our friendly countries (Saudi Arabia) has given the confirmation to the IMF of the $2 billion loan.”

Read Dar pulls out of WB-IMF spring meetings

“We are now waiting for the confirmation of $1 billion loan from one friendly country” (the UAE),” said the finance minister. He said that that would help meet all the prior actions for the staff level agreement and it would take another two weeks to take the matter to the IMF board.

Pakistan and the IMF had agreed on a $6 billion external financing gap to be bridged through a combination of bilateral, commercial and programme loans. However, so far except for a commitment from Saudi Arabian, there is still a gap of $4 billion.

The country’s gross official reserves have slipped to $4.2 billion even after $1.7 billion Chinese injection. The government is avoiding the default by restricting outbound flow of the foreign currency to the extent of inward flows on account of exports, remittances and some loans.

But this is creating a huge backlog in the shape of nonpayment of dividends, in addition to causing a shortage of essential imported goods and raw materials that will require billions of dollars in future to make up for the shortfall.

Dar said that despite the worst of the liquidity crisis, the country did not delay its global sovereign payments of $11 billion.

Dar also acknowledged that the IMF had questioned the government’s decision to give petrol subsidy, saying that he has answers to all the questions. The minister added that the subsidy involved charging the affluent more and providing that amount to the underprivileged in shape of relief (subsidy), adding that it had nothing to do with the budget.

However, IMF Resident Representative Miss Esther Perez had told The Express Tribune that the IMF would encourage targeted subsidies and sought greater details from Pakistan “in terms of its operation, cost, targeting, protections against fraud and abuse and any offsetting measures”.

Dar once again blamed the IMF for the delay in starting the programme review talks. “When I went to the IMF with my delegation in October 2022, I invited them to Pakistan for the ninth review, which is technically the September 2022 review and for unknown reasons, they finally came to Pakistan in January 2023.”

Skipping US trip

The finance minister said that he canceled the US trip because of the “prevailing constitutional crisis” and the Supreme Court’s orders to the federal government to give Rs21 billion for the election in Punjab by April 10, implying that the money thus saved would contribute towards holding the polls to the two provincial assemblies.

“Due to these circumstances and on the prime minister’s directives, I have dropped my plan to visit Washington. The minister said that it was not unusual and he would virtually participate in meetings where his participation was needed.

“It is astonishing that some are saying that I was told not to go by the IMF. The IMF cannot tell me not to attend. Pakistan is a member of the World Bank and the IMF. It is not a beggar,” he said.

He accused some analysts of twisting the facts. “Someone is writing that I did not get the meetings I wanted. Someone else is suggesting that I should have ignored the domestic crisis and gone anyway,” he said.