PM Shehbaz hopeful this will be last IMF agreement

Till 2018, Pakistan was on its way to progress with economy growing at rate of 6.2%, he says, lambasting former govt

Addressing the nation hours after news of a $3 billion arrangement with the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif said that it is vital to know the reason behind the economic burden being faced by the people.

“Today, as you all know, our interaction with the IMF which was under way for many months reached a very positive conclusion and you all must have read the IMF statement. I don’t need to say anything further on it,” said the PM, expressing his gratitude for the development.

"Till 2018, Pakistan was on its way to economic progress under the leadership of former prime minister Nawaz Sharif at a rate of 6.2%, load shedding was reduced and there was significant development work taking place under the China Pakistan Economic Corridor. Pakistan was progressing along with other countries of the world. Then, as we know, the Pakistan Tehreek-e-Insaf government was set up through most blatant rigging."

Narrating his version of the PTI’s tenure in government, PM Shehbaz said that they caused delays and a lack of trust when it came to reviving the IMF agreement. The PTI government showed reluctance in engaging with the IMF, with the process hitting snags for six months, recalled the premier. Once an agreement was reached it was violated, he added. Then the former government displayed mismanagement during Covid times, he said, citing LNG prices and procurement as one example.

The premier said that Pakistan was at the brink of default and headed for a similar fate as Sri Lanka but his government made last ditch efforts to secure the deal.

Referring to the coalition government’s performance in the past year, he said it might have committed “honest mistakes” but it also strove to tackle the country’s issues.

Read Pakistan, IMF reach staff-level pact on crucial $3 billion bailout

“Worst ever floods came [last year], all our energy was spent on [tackling them],” he said.

Despite multiple meetings between the IMF and the finance ministry led by Ishaq Dar, an agreement could not be reached, he said.

PM Shehbaz then moved onto his meetings with IMF MD Kristiana Georgieva and how he assured her of efforts being made by his government. To meet the Fund's conditions, the PMN-L and other allied parties under the Pakistan Democratic Movement (PDM) banner put their political capital at stake and took bitter steps to ensure economic stability, said the premier.

The meetings in Paris were a turning point, he said, adding that Georgieva told him about two to three further measures that were needed, including concerns about the external financing gap of $2 billion.

PM Shehbaz said that he then directed Dar to make a "final effort" to resolve the IMF's "serious doubts".

"The efforts made in the past three months are what prevented Pakistan from defaulting," he said, referring to China, Saudi Arabia and UAE's vital roles in these efforts with financial relief provided by them. He further referred to his meeting with the president of Islamic Development Bank, which then announced $1bn in funds for Pakistan. 

The premier expressed his gratitude to these countries, the finance ministry and thanked Foreign Minister Bilawal Bhutto Zardari as well as Kristiana and her team for their efforts. He also mentioned the Sri Lankan president's crucial role in supporting Pakistan's case before the IMF during Paris meetings and Chief of Army Staff (COAS) Gen Asim Munir's efforts in securing funds from the UAE and Saudi Arabia. 

PM Shehbaz said that the staff level agreement is a major step towards securing the IMF board's approval, which will tentatively convene on July 12 to take up the $3b stand-by agreement.

“God willing the instalments will start coming in after the July board meeting. I am very thankful to the IMF managing director and her team that they showed sincerity after the Paris meeting and cooperated alot. I am also thankful to Ishaq Dar and his team,” he said.

However, the premier said it is not a “moment of pride but a moment of concern”, remarking on whether nations can develope off of loans. “Never, forget this, we were forced to take this loan and it is my prayer...that this is the last time Pakistan goes into an IMF programme and we never have to take a loan again,” he hoped.

Moving on to the plan of action for the future as "this life of loans could not end like this," PM Shehbaz said that his government had unveiled an Economic Revival Plan in recent days, which envisages capitalising on Pakistan’s untapped potential in key sectors of defence production, agriculture and others including information technology. All segments of society and institutions would have to play their part in ensuring the country's economic revival, he added. 

According to the PM, this revival plan would lead to employment for four million people, bring billions of dollars in investments from the Middle East and business arrangements. 

"It is my faith that Pakistan will progress and no one can stop it," he said, calling for united efforts towards achieving the same. 

Read more Rs215b new taxes imposed to placate IMF

Meanwhile, Finance Minister Ishaq Dar said that while he was initially reluctant to impose further Rs215b in taxes and cut spending by Rs85b in the revised budget, he did so after the PM's assurance of support. He credited PM Shehbaz for reaching "breakthrough" with the IMF during meetings in Paris. 

According to Dar, Pakistan is likely to recieve $1.18b within three to four days of the IMF's board meeting in July. This stand-by agreement is Pakistan's 30th programme with the IMF. 

The finance minister said that speculations about the country defaulting should be countered. "Pakistan is not a country to default," he said, adding that "We  were very active for a Plan B if God forbid the IMF [programme] had not worked out”.

Expressing optimism towards economic stability, he said that it is now time to focus on achieving growth. He said that the incumbent government aims to take foreign reserves to $14b to $15b by the end of its term. 

Earlier today, the IMF reached a staff-level pact with Pakistan on a $3 billion stand-by arrangement, the lender said, a decision long awaited by the PML-N government as it scrambles to tackle a crumbling economy ahead of general elections.

The deal, subject to approval by the IMF board in July, came hours before the current agreement with the IMF expires later today (June 30). Although essentially a bridge loan, it offers much respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.

Pakistan's sovereign dollar bonds were trading higher after the announcement, with the 2024 issue enjoying the biggest gains, up more than eight cents at just above 70 cents in the dollar, according to Tradeweb data.