Pakistan crossed many "red lines" for the International Monetary Fund programme and compromised its "dignity" to bridge the external financing gap, said Prime Minister Shehbaz Sharif on Tuesday while narrating his first-year struggle to pull the country back from the brink of default.
The premier, who celebrated his government's one year in power in an unusual way by holding an open cabinet meeting, narrated the tale of the past one year of getting foreign loans and meeting the IMF demands with an objective of avoiding the sovereign default.
We crossed many red lines in the IMF and everyone worked really hard to fulfill the IMF conditions, said the prime minister in his address to the special federal cabinet meeting, which was also attended by people from different walks of life and journalists.
The prime minister talked about the IMF conditions at a time when the Fund team is already in town to review the country's performance before approving the second loan tranche of $1 billion.
It was the second cabinet meeting in the past 11 years that was open for the media. Earlier in January 2014, former prime minister Nawaz Sharif held a cabinet meeting in the presence of the media in which the then finance minister Ishaq Dar had given a presentation on the state of economy.
For the Extended Fund Facility (EFF), the IMF demanded to arrange $5 billion to fill the external financing gap and money does not grow on trees or could be mined, thus, I and the Chief of the Army Staff went to friendly countries, said the prime minister.
He narrated another conversation between the United Arab Emirates ruler and him about the rollover of the $2 billion maturing debt. The debt matured in January which the UAE extended for one more year.
During his last visit, the UAE ruler said the $2 billion debt was overdue and what was the plan, said the prime minister. Then after our conversion, the UAE ruler said that the debt was rolled over, said Sharif.
"When we go to ask for money, we compromise our dignity," said Shehbaz Sharif.
Back in 2018, the then commerce minister Abdul Razak Dawood had narrated a similar situation when former prime minister Imran Khan went to Saudi Arabia seeking more loans. He had secured the $6 billion package. Dawood had described the journey as "awful".
In the past one year, 20 onshore and 40 offshore licenses for oil and gas exploration have been issued and these explorations would help pay off the $130 billion foreign debt, said Deputy Prime Minister Ishaq Dar.
Saudi Arabia, the United Arab Emirates, Azerbaijan and Kuwait have planned to invest cumulatively $27 billion and the government is working on offering bankable projects, said Ishaq.
Planning Minister Ahsan Iqbal disclosed that Pakistan had internally defaulted in April 2022 when the finance ministry had refused to release the development budget for the April-June quarter of that fiscal year. It had happened for the first time that no development budget was released in any quarter, he added.
In his speech, the prime minister said that during the last one year, it was a matter of satisfaction that neither a single case of corruption had surfaced nor a false single allegation in this regard was leveled by the opposition.
However, his government is now dealing with an inquiry against 37 allegedly corrupt Customs officials who have been named by a premier intelligence agency as part of a 78-person smuggling network.
The prime minister said that they should work hard to provide relief to hapless and financially weaker segments of society with all kinds of assistance and compassion especially in the holy month of Ramazan.
Sharif criticised the bureaucracy and said that many of them do not work and fine lame excuses.
The prime minister said that the government would distribute a Rs20 billion Ramzan package to benefit four million deserving families through a digital wallets system. Each family would get Rs5,000 each, thus the new system would shut doors on all kinds of allegations of financial mismanagement which had badly marred the functioning of entities like Utility Stores Corporation, said Shehbaz Sharif.
The premier said that with the hard work, the government succeeded in achieving the economic turnaround and steering the country out of the financial straits. The prime minister said all the macroeconomic indicators were on the high scale and asked the members to work hard with dedication and commitment as these were prerequisites for making Pakistan a one trillion dollars economy by 2035.
Sharif underlined the need for plugging Rs850 billion losses incurred by the loss-making state-owned enterprises, terming them 'bottomless pits', which needed to be plugged, besides the need to end circular debt in the power sector. He expressed the optimism that with collective efforts, Pakistan would emerge stronger and stressed upon development of a culture of forgiveness, affection and tolerance in the society.
The deputy prime minister said that Pakistan's diplomatic isolation was over and the country has now become a non-permanent member of the UNSC for the year 2025-26, adding after a gap of 27 years, multilateral international conferences like SCO and girls education were held in Pakistan.
Economic stabilization
Finance Minister Muhammad Aurangzeb gave an overview of the economy and said that Pakistan Stock Exchange had witnessed an increase of 71% in return while the current account surplus was the highest in the last 20 years. He apprised that the plans for rightsizing of 43 ministries and their 400 attached departments were afoot, whereas pension reforms and agriculture tax were introduced for the first time.
The minister said that the FBR revenues increased 26%. The other major steps were the introduction of a faceless assessment system which saw revenues up by 16% in the shortest time, he added.
Aurangzeb said all the international monetary institutions had lauded the economic achievements of the incumbent government in Pakistan.
The finance ministry addressed the issue of growing pension liabilities and the direct contributory pension scheme was notified in July last year. The Pension Fund has also been created and multiple pensions are ended, he added.
Aurangzeb said that for the first time, the federal government bought back Rs1 trillion of debt to ease repayment pressures. He said that the first Green Sukuk will be issued soon on the PSX and Panda Bonds will be floated before the end of this calendar year in the China market to diversify funding sources and reduce cost.
The Finance Ministry signed the National Fiscal Pact, set up a tax policy office and reactivated the National Tax Council, said Aurangzeb.
Power Situation
Minister for Power Awais Ahmed Laghari briefed the cabinet about the power sector reforms, saying that these efforts had resulted in reduction of Rs151 billion industrial cross subsidies. Till February this year, the per unit electricity price had been reduced by Rs4.96, benefitting the consumers and industry alike, claimed the Power Minister.
Laghari further said that the contracts of 14 independent power producers have been reviewed and five deals of inefficient IPPs have been terminated and agreements for eight bagasse plants had been reached. These steps resulted in Rs1.33 trillion lifetime savings, he added.
Federal Minister for Information Technology, Shaza Fatima Khawaja also presented a report about the performance of her ministry saying that 15 million new broadband subscribers were added while the telecom sector was contributing Rs341 billion to the national economy.
Speaking on the occasion, Minister for Defence Khawaja Muhammad Asif said the last one year of the government was like a journey to rise from the ashes. He said an opposition party who had enjoyed power in the past, had policies which did not sync with the national interests. The same party was out to create chaos in the country and inviting foreigners to interfere in the internal matters of the country, he added.
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