PM gives nod to IMF talks for long-term bail out

Chairs meeting of core economic team immediately after taking oath

ISLAMABAD:

 

Getting down to business straightaway, Prime Minister Shehbaz Sharif gave the green signal on Monday to begin negotiations with the International Monetary Fund (IMF) for a new long-term bailout package.

His one of the first decisions after taking oath of the 24th prime minister, was to further strengthen the Special Investment Facilitation Council (SIFC) and winding up or selling the loss-making enterprises.Shehbaz chaired his maiden meeting on precarious financial situation with his core economic team, taking stock of the discussions with the IMF.

He also directed for preparing a roadmap on war footing to deal with the current situation.The suspicious absence from Shehbaz’s core economic team was former four-time finance minister Senator Ishaq Dar.

The new, but an anticipated, inclusion in the team was Muhammad Aurengzeb, currently President of the Habib Bank Limited.Aurengzeb is expected to be inducted as a special assistant to the prime minister. Aurengzeb is a foreign nationality holder and doesn’t currently have the Pakistani nationality, which was a hurdle in his way to becoming a federal minister.

He belongs to Punjab’s Ramdey family and is considered close to Shehbaz.Among his core teams were Senator Musadiq Malik, former MNA Ali Pervaiz and deputy chairman Planning Commission Dr Jehanzeb Khan. Shehbaz had also included Ali Pervaiz in his core team in April 2022, but he was not brought to the table.

The huddle suggests that Shehbaz Sharif is keen to pick a new economic team instead of relying on experienced hands. The State Bank of Pakistan (SBP) governor, Federal Board of Revenue (FBR) chairman, Finance secretary and Planning secretary were also part of this core economic group.

Finance Secretary Imdadullah Bosal briefed the prime minister about the current fiscal situation, implementation status on nearly two and a half dozen IMF conditions for the second review of the IMF and the likely IMF demands for the new programme.Bosal informed the meeting that this fiscal year’s budget deficit would exceed the IMF agreed target.

One participant also highlighted the issue of shortfall in the FBR tax revenues and the need for any additional measures, although the FBR had achieved its eight-month collection target of Rs5.83 trillion.

On the issue of next programme, the prime minister was informed about the likelihood of revenue measures and cut in power subsidies. Shehbaz instructed for immediate advanced discussions with the IMF for the Extend Fund Facility (EFF), according to the press statement by Prime Minister’s Office.

The EFF is a long-term debt instrument that the IMF signs with member states, facing balance of payments and debt repayments crisis. Pakistan needs about $30 billion in the next fiscal year for debt repayments and current account deficit financing. Shehbaz also instructed to reduce the government size.