Blome optimistic about new govt's IMF ability

Cautions economic stability hinges on economic policies over next few months

KARACHI:

US Ambassador to Pakistan Donald Blome has expressed confidence in the incoming government's ability to pull off the International Monetary Fund (IMF) programme but cautioned that economic stability hinged on the economic policies over the next few months.

While speaking to a gathering of select journalists at the US Consulate General in Karachi, he said collaborating with the new government would be a top priority.

“And our belief is it will take a concerted effort to ensure it moves in the right direction. If Pakistan maintains a consistent commitment to economic reforms, those reforms will build certainty and confidence for investors and enable economic growth fuelled by sustainable, inclusive, and …. economic development,” the US diplomat said.

“We are confident Pakistan can do this and break free from an over-reliance on unsustainable debt,” he added.

“We want to see Pakistan succeed in attracting more trade and investment, especially US investment. The economic success of Pakistan and its people remains a top priority for us, and we will continue to partner with Pakistan through a wide range of avenues, including technical engagement, and development assistance, and continue to strengthen our trade and investment relationship,” he said.

He said real and lasting stability depended on governments and citizens finding a way to work together to expand opportunity and unlock the enormous talents of its people.

The US diplomat further noted that Pakistan was the largest export market and the US sees huge potential for increasing two-way trade and investment between our two countries, and it's been a major priority for me as ambassador.

“More than 80 US companies operate in Pakistan right now, making the United States one of Pakistan's leading investors. And we saw about $250 million in Foreign Direct Investment (FDI) from the US alone in FY22.”

“US companies offer Pakistanis high-paying, 21st-century jobs, training, skill development, and labour protections, and many of these companies also give back generously to their local communities through a variety of corporate social responsibility programmes in which many – US companies are pioneers.

And over the years, our top companies have invested hundreds of millions of dollars here and employ hundreds of thousands of Pakistanis in great jobs.”

“And we want to see more US investment flow into Pakistan. We all know the upsides, as I've just mentioned – cutting-edge technology, high-skills training, employment of Pakistanis in leading-edge type of jobs,” he added.

“Pakistan has made good progress confronting serious economic challenges during the past six months by successfully implementing the current IMF programme. It remains vulnerable to shocks such as Russia's illegal invasion of Ukraine, devastating floods, and trade disruptions such as current events in the Red Sea, but continued progress on key reforms can help buoy the economy,” he said.

He said governments cannot grow the economy by themselves to prosper in the 21st century, stating, “You must grow from the bottom up, allowing people to unlock their talents through private enterprise, economic freedom, and action.”

“So, to anyone who might doubt the durability of the US-Pakistan relationship, I would – I generally point to the long-term investments that we've been making since the start of our relationship, investments in the Pakistani people and their future,” he said.

Blome stressed that Pakistan has to find ways to look where it can be competitive in US markets and there are many possibilities that traditionally of course have been focused on textile and a few other sectors, “but you know the US economy and the level of US imports is enormous and there's a huge room for growth in trade relationship”.

“We will continue to look for ways to help ensure Pakistan, the Pakistani companies have opportunities.”

He said firms will look for opportunities to invest in Pakistan as they have in the past. There's an enormous mutual benefit to be had and expanding this, important trade in economic relationship remains between both countries, which is tested over time.

Speaking about volatility and the shift of the local businesses, he said there are a number of issues and concerns to international investors including volatility or inconsistency and policies where they are looking. However, it hasn't meant that there's been a large exodus of existing investors.

He said he saw cases of investment deferred rather than cancelled because of some watchfulness of government’s policy.

He said during the last two years, the pattern of strong capital shifts investment flows that have been moving from place to place particularly trying to respond to supply chain disruptions or potential supply chain disruptions and things like that as companies are going to diversify suppliers.

He said any Pakistani government should be looking at carefully in terms of prioritising.

He expressed Pakistan's desire to draw external Foreign Direct Investment (FDI) and highlighted the need for a proactive approach in competing with other nations to attract such investments into the country.

Blome noted that any Pakistani government today faces a challenging environment with a very difficult debt situation, adding that one of the necessary tasks for any government is to find ways to raise the revenues required to meet its payment obligations.

He highlighted that fiscal reforms on energy allow it to get its budget back in balance and reduce reliance on external borrowing which is becoming more difficult to get so all of those things will create a healthier Pakistani environment in general, particularly the economic environment.

“We've revived some of our high-level economic dialogues including a ministerial level. We're looking for ways to unlock some of those issues in our two-way trade and of course, have a robust assistance programme for Pakistan in terms of economic growth."

"At the end of the day, I think. We see it as a strong national interest of the US for Pakistan to be stable and prosperous."

"We want to help Pakistan succeed in this challenging time and I think we're committed to finding ways. More areas can be expanded. We put a renewed emphasis on nutrition and maternal health, which obviously became a more acute crisis in the wake of the floods in 2022. So there's a lot of areas where we are re-evaluating and refocusing I think it's still a process.” he said.

He mentioned that the IMF functions based on policy guidelines established by its board, which includes the US and various other countries. Despite some misconceptions about behind-the-scenes manipulation, it operates with a professional staff, he clarified.

Regarding the Green Alliance Initiative, US Ambassador Donald Blome stated that through the USA and technical assistance, they are exploring ways to catalyze and expedite the energy transition in collaboration with Pakistan.

“Look at what the bilateral mutual interests are between our two countries to put the relationship on a sustainable path that addresses what our future-looking priorities are for both countries. This area of what we've come to call the Green Alliance framework covers a lot of those things that we see as priorities in our going-to-be priorities for Pakistan. So that includes energy transition to renewable which will be hugely beneficial for Pakistan while reducing its reliance on expensive fuel,” he said.