US ambassador asks for Pakistan’s plan ‘B’

Dar did not share details but says country is surviving without IMF

ISLAMABAD:

The United States asked Pakistan on Wednesday about its fallback option in case the International Monetary Fund (IMF) programme ends next week without disbursing the third-to-last loan tranche of $1.2 billion.

During a meeting with Finance Minister Ishaq Dar held in the Q Block, Donald Blome, the United States Ambassador, raised the question, according to finance ministry officials.

The “plan B,” as Pakistani authorities term it, is now the most sought-after blueprint that everyone is looking for, as the four-year IMF programme may meet the same fate as the 21 previous failed programmes.

Blome’s question came after Dar briefed the top US diplomat in Islamabad about the government’s efforts over the past several months to revive the $6.5 billion bailout package.

The meeting took place a day before Prime Minister Shehbaz Sharif is set to meet with the Managing Director of the IMF, Kristalina Georgieva, on the sidelines of the Paris Climate Finance Summit. The PM left for Paris on Wednesday for a two-day visit.

So far, the premier’s efforts to seek the managing director’s intervention have not achieved the desired results, including an interaction with ambassadors from the West, Europe, and Asia this week. PM Sharif has had telephonic contact with Kristalina in the past month and has also written three letters to her, highlighting Pakistan’s efforts to revive the stalled programme.

Sources say that Dar did not share many details about the fallback option but mentioned that the country was surviving without the IMF.

People privy to Pakistan’s fallback plan stated that the authorities would try to advance some of the government-to-government transactions to raise funds, including handing over four port berths to the United Arab Emirates (UAE).

The government is also relying on a $100,000 no-questions-asked foreign remittance amnesty proposed in the budget for the next fiscal year. However, if no breakthrough is achieved during the expected PM-MD meeting in Paris, the government can implement this new amnesty from June 25th.

In that case, a person can whiten $200,000 within 370 days, first by availing this facility before June 30th and then again in July as part of the next fiscal year’s limit, according to the sources.

If the military’s idea of the Special Investment Facilitation Council (SIFC) proves successful, the Gulf countries can provide some funds in advance for a few corporate farming projects in which they are interested, according to the sources. However, this plan is still in its infancy stage, although these countries have shown interest in joint ventures many months ago.

“The finance minister also informed the envoy about the progress on the ongoing talks with the IMF and stated that the government is committed to completing the programme,” according to the finance ministry.

Dar reportedly told the US ambassador that China helped Pakistan in a major way by refinancing $1.3 billion of foreign commercial loans ahead of time. However, despite all the difficult measures that Pakistan took since February this year, the finance minister stated in the meeting that the IMF was not cooperating, according to the officials.

In February this year, the government imposed a mini-budget of Rs170 billion, increased electricity prices, gas prices, and also raised taxes on fuel. However, it could not arrange $6 billion in loans, and the IMF’s concerns about the foreign exchange market remained largely unaddressed.

Dar briefed Blome about the progress made in narrowing the current account deficit, which stood below $3 billion during the first 11 months of the current fiscal year. May was the third consecutive month in which the country achieved a current account surplus, helping to retain the official foreign exchange reserves at their current level.

Dar informed the US ambassador about the fiscal consolidation that he introduced in the budget, showing a primary budget surplus of Rs379 billion.

The finance minister further informed the US ambassador about the government’s budgetary measures to reduce the fiscal gap to meet its national and international financial obligations, according to the finance ministry. He also shared the government’s economic policies and priorities to address the challenging economic environment and set the economy on the path to stability and growth, it added.

A day earlier, Britain’s Minister of State in the Foreign, Commonwealth & Development Office (FCDO), Andrew Mitchell, held a virtual meeting with Dar. Mitchell advised the finance minister to bridge the trust deficit with the IMF.

An official handout from the finance ministry stated that Dar told the US ambassador that Pakistan values the deep-rooted historic and durable bilateral relations with the US on economic and trade fronts. The two sides also exchanged views about areas of common interest and how to enhance the existing bilateral relations between the two countries further, the statement added.

The US ambassador expressed confidence in the policies and programmes of the government for economic sustainability and socio-economic upliftment of the masses, said the finance ministry. He extended his support to further promote bilateral economic, investment, and trade relations between the two countries, it added.

Published in The Express Tribune, June 22^nd, 2023.

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