Aurangzeb optimistic about larger bailout program from IMF

It is Pakistan’s programme and it is supported, assisted and funded by the IMF, says finance minister

ISLAMABAD:

Federal Minister for Finance and Revenue Muhammad Aurangzeb on Saturday expressed the expectation of larger bailout programme from the International Monetary Fund (IMF) and considered improving the revenue distribution between the provinces and the Center.

Speaking to a group of journalists and think-tanks in Washington, the minister said, if the loan is approved, Islamabad would revisit its NFC award that allocates revenues between the federation and the provinces. He said that some of the sectors which need to be brought in a much bigger way into the tax net were provincial markets.

Pakistan is requesting a “larger and longer” multi-billion-dollar loan programme from the IMF and discussions are underway with the Fund’s officials, the finance minister said, without specifying how much the nation was trying to secure.

Aurangzeb, who is in the US capital with his team to participate in the IMF and World Bank’s meetings and request new financial package, said once the mission is back in Islamabad, we are going to agree on the priorities and the principles.

“I believe it is Pakistan’s programme. It is not an IMF programme. It is a Pakistan’s programme and it is supported, assisted and funded by the IMF. What’s the size, and the reality and where we are, it’s premature to talk about that. We have our own views and we’ll share it with IMF. But I would rather leave it to the joint meetings in terms of the size and the duration of the programme,” Aurangzeb said.

Also read: Pakistan aims to agree outline of new IMF loan in May, says finance minister

Asked by TRT World if Islamabad would revisit its National Finance Commission (NFC) award for the allocation of revenues between the federation and the provinces once IMF approves the new loan programme, Aurangzeb said, Pakistan needs to review it in the context of 18th Amendment where a lot of stuff has been devolved to the provinces.

“It is a discussion which we will have with the provinces in terms of either expenditure sharing or requesting them to incentivise to bring up the tax base, because the reality is, after the 18th Amendment and the NFC award, some of the sectors which need to be brought in a much bigger way into the tax net are actually provincial markets,” he said.

“Whether it is agriculture, real estate or property construction, we can help support systems, but it is for them to actually go ahead and do it,” he said, adding that he has already engaged with the chief ministers of Punjab and Sind provinces with respect to starting the dialogue. “Pakistan signed a short-term agreement with IMF in 2023. Pakistan is seeking a new bailout of up to $8 billion when the current one of $3 billion expires,” he added.

The finance minister’s visit to US comes as IMF published its updated World Economic Outlook that shows Pakistan will grow at 2 per cent. The IMF has kept the country’s growth rate at 3.5 per cent for the next fiscal year.

Meanwhile, Aurangzeb has ruled out any further significant rupee devaluation.

Speaking at a round table meeting with Bloomberg team in Washington, he said Pakistan’s solid reserves, stable currency, and growing exports support against rupee devaluation. The finance minister said that his country was ramping up support for industries, agriculture and IT to boost national growth above four per cent in the coming years.