Pakistan keen to cut a ‘new’ IMF deal

ISLAMABAD:

Amid a stalemate on securing a bailout from the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif has informed fund’s Managing Director Kristalina Georgieva about Pakistan’s intention to secure a new bailout.

Moreover, Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha on Wednesday criticised IMF mission chief Nathan Porter’s comment on the country’s political situation, saying he should not “interfere in politically domestic” matters.

Sources told The Express Tribune that the prime minister had revealed Pakistan’s intentions to sign a follow-up bailout package during his telephonic conversation with the IMF managing director on the weekend.

Pakistan’s current $6.5 billion programme stood derailed and the efforts being made to revive it for the past seven months could not materialize. The programme is going to expire on June 30.

The sources said that the IMF chief reciprocated the premier’s views about the need for another package. Diplomatic corps and international financial institutions think that Pakistan cannot avoid default without securing a new IMF package.

In order to repay $25 billion debt in the next fiscal year, Pakistan has to have an IMF umbrella. The Ministry of Finance is also of the view that the follow-up programme is needed to reinforce and build upon the reforms initiated during the current programme, a senior official of the ministry said on the condition of anonymity.

However, the prime minister’s latest initiative seeking a new deal runs counter to Finance Minister Ishaq Dar’s stance who, not long ago, had propagated the idea that Pakistan should stop living off the IMF. But, there a few members of the economic team think that the IMF programme is a necessity at this point in time.

The sources said that the IMF managing director emphasised that Pakistan should immediately fulfill the outstanding conditions particularly arranging foreign loans and leaving the exchange rate on market forces by ending administrative controls.

Nathan Porter, the IMF’s mission chief to Pakistan, also reiterated the views in a statement in which he emphasised that Pakistan should present the next fiscal year’s budget in line with the IMF framework and also give clarity on the exchange rate policy.

Minister of state

“First, we want to take the current programme to the end, only then will we discuss how to move forward from that point,” said Dr Aisha Pasha, the Minister of State for Finance, while responding to a question after attending a meeting of a parliamentary committee.

The prime minister had called the IMF managing director to seek her intervention for the revival of the programme, particularly completion of the pending 9th review before the programme’s expiry by the end of June.

The government’s constitutional term is also set to end on August 12 and it has to be seen whether this or the interim government would initiate any dialogue with the IMF for the new programme.

Dr Pasha slammed the IMF’s intervention in Pakistan’s domestic affairs. “Nathan Porter should not interfere in Pakistan’s political and domestic affairs,” said the minister of state while responding to a question. She termed Porter’s statement about the political issues as “extraordinary”.

“This is an extraordinary thing, as we (government) are supporters of democracy. We want all institutions to work within the parameters of the Constitution and are moving forward in accordance with rule of law,” she said.

Her reaction came in response to Nathan Porter’s statement, who on Monday, had said that “we take note of the recent political developments, and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and the rule of law”.

Talking to the media, Dr Pasha said the government has not received any “official communication” from the IMF about its observations on Pakistan’s political matters. But she said that the multilateral lender “does not give such statements where they speak about a country’s political matters”.

Dr Pasha added that the government remained engaged with the IMF at the technical level, and she noted progress on that account.

To a question, whether Ishaq Dar was happy with the prime minister’s decision to initiate a telephonic call with the IMF head, Dr Pasha said that the entire economic team was on board with regard to initiating the call to the IMF managing director and added that the prime minister represented Pakistan.

“The prime minister speaks on behalf of the whole of government and he clearly stated that Pakistan wanted to complete the ongoing programme,” said Dr Pasha.
To another question, Dr Pasha said that Pakistan had shared the budget numbers and the IMF has talked with the SBP about the issues related to the opening of letter of credits for the imports.

The sources said that the Ministry of Finance shared those numbers that are already reported and suggested a 52% hike over this year’s approved budget. The Ministry of Finance has suggested around Rs14.6 trillion budget outlays for the next fiscal year with a federal budget deficit of around Rs7.8 trillion.

Dr Pasha said that there was no possibility for any further extension in the current programme. While talking about the PM-MD call, Dr Pasha said that “the government has conveyed to the IMF that continuous delay in the revival of the programme is not in the interest of Pakistan and the IMF”. She said that the uncertainty needed to end.

“We have clearly told the IMF managing director (Kristalina Georgieva) that the government wants to complete the programme. The IMF chief has also conveyed that she wants to see progress,” she added.