Presidential guarantee: Pakistan takes exception to IMF’s stipulation
Pakistan has accused the International Monetary Fund (IMF) of lacking an understanding of the country’s political system after the Fund attached an unusual condition for a new bailout programme – that is, the president signing the letter of intent.
As the IMF’s condition creates ripples in the power corridors, more details surface about the post-evaluation report of an $11.4 billion bailout programme.
Sources in the Ministry of Finance told The Express Tribune that the government has differed with the Fund’s recommendation. “The Fund is of the view that President of Pakistan takes every decision, thus, it would be appropriate to seek guarantees from the highest level”, said a senior ministry official on condition of anonymity.
In its comments on the IMF report, the finance ministry explained to the Fund that the president’s consent is always taken on important policy matters as the finance minister takes decisions under guidelines given by the Cabinet, prime minister and the president.
The IMF had written to Islamabad that any future bailout programme should be co-signed by the president in a bid to seek guarantees for implementing reforms at the highest level after the finance minister failed to honour commitments. It is standard practice for a recipient country’s finance minister to sign the letter of intent on behalf of the government along with the State Bank of Pakistan governor.
The fluid political situation in the country compelled the IMF to put forward the unusual condition, admitted the officials. They added that the IMF wanted to seek guarantees at the president’s level due to the upcoming general elections and the uncertainty looming over the political arena.
However, the government has reiterated to the IMF that, in case of any change of the government, it is standard practice for the new setup to own all international treaties and agreements.
According to a finance ministry official, the IMF sought the guarantees at the highest level after the commitments given by Finance Minister Dr Abdul Hafeez Shaikh were not even owned by his own government. Hafeez Shaikh was not available for comments.
After differences of opinion between IMF officials and Pakistani authorities, the Fund’s Board of Executives will review the situation.
When approached, the IMF’s Washington-based spokesman did not categorically deny that the president’s signing of the agreement was a Pakistan-specific condition.
“The IMF has not received a request for a new programme from the Pakistani authorities. We remain in a close and constructive dialogue regarding the prospects and challenges of the Pakistani economy with the finance minister, our principal interlocutor, and other members of the economic team,” said a spokesperson of the Fund without explaining the reasons for putting such an embarrassing condition.
While both the IMF and Pakistan deny holding negotiations for a new programme, the contents of the report and the IMF spokesman’s comments suggest that negotiations have been going on for some time.
Other stakeholders
The sources said Pakistan has also raised issue with the IMF delegation meeting with various stakeholders without the consent of the finance ministry and foreign office. They added that the IMF staff’s meetings with various stakeholders in the past “was a violation of defined procedures” for such meetings.
The finance ministry had also protested over IMF’s Islamabad-based representative, Paul Ross, meeting with the Punjab government without its consent. The meetings were arranged with the help of the son of the then chief secretary Punjab Javed Mahmood. Mahmood’s son is an employee of the IMF.
The IMF team also held meetings with the army chief, the opposition representatives of Pakistan Muslim League-Nawaz and Pakistan Tehreek Insaaf, as well as Muttahida Qaumi Movement in the last week of July. It was not clear whether this time the meetings were held with the consent of the finance ministry. The team also met with industrialists in Lahore.
Published in The Express Tribune, August 12th, 2012.
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Is the IMF demanding guarantee for payback from the President because he has the ability to pay out of his own pocket?
Who cares for IMF. India is not shining and broke, USA in Bankrupt. In fact the entire world is broke with the exception of China and Pakistan. Ex servicemen and Ex diplomats of Pakistan cannot be wrong.
@Falcon: "IMF should meet with all the political stakeholders in the country. They are putting too much hope in Mr. President."
It did meet ELECTED opposition as well as army chief. If you expected that they should meet Imran Khan - well he does not have any seat in the parliament or the provincial assembly. IMF does not contact people based on survey results. I am sure if Imran comes to power in a big way as you hope, IMF will deal with him.
@Polpot: One friend is deep in the ocean since May 2, and another is looking high up in the Himalayan skies for the drones.
On this issue, IMF should have met the CJ also besides meeting COAS.
Pakistan is so funny, that in one recent talk show the anchor by slip of tongue (or common perception), mentioned DPC as Defense Ministry. He corrected it though, when his colleague pointed it out laughingly.
In Pakistan No one is willing to admit that Buck stops at my desk.
The IMF know about as much about Pakistan's political structure as they do about its economics (not very much).
"...this is what the credibility of our country is today…thanks to the present govt & its allies…." It is not all "thanks to the present govt & its allies". Give some credit to all those who preceded them, else it would be being unfair to them!
@What the......?: "Your comments are purile and boring. Please get a life." ++++++++++++++++++++++++++++++++++++++++++++++++++++++ Despite being puerile and boring they can move you to respond:) Curious, very curious.
@Polpot: Your comments are purile and boring. Please get a life.
And by the way, no amount of embellishments ++++++++ is going to improve their quality!
The IMF's attitude is a reflection of the credibility this government enjoys.
Head of the states are implanted by IMF in countries like Pakistan. Who take loans from IMF, for the country...more then 50 % goes to the pockets of these corrupt leaders, plus they take their commission from IMF like any other sales agent.
Then IMF want guarantees for returning of this loan, so in order to make sure that they will get their loan back, they put conditions, like tax raise, price raise, etc.
who suffers, pakistani public..who pay back this loan, in the shape of electric bills etc.
People are least interested in Courts power or Parliaments power. They are all corrupt. No one is sincere with the ppl...So called democracy...only 15 % ppls votes are ruling the country. All parlimentarians are rats, who stomach are always empty, and never filled.
@Mard-e-Haq: Keep on Dreaming, Sir!! . . .;-)
Beggars, apparently, can be choosers.
@Mard-e-Haq: "Our Islamic brothers in Saudi Arabia and Kuwait can double that amount without any interest attached!" +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Sir, what about the friend with friendship higher than the Himalayas and deeper than the oceans?
"the commitments given by Finance Minister Dr Abdul Hafeez Shaikh were not even owned by his own government." ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ So now you see why its futile for Indians to make any progress in diplomacy with the Pakistanis. Hon'ble Excellency Ms Khar has been rather quiet anyhow.
It is obviously the time to sue IMF for its attempted conspiracy to malign Pakistan +++++++++++++++++++++++++++++++++++++++++++++++++++++ Oh but its difficult to sue those that one intends to borrow from.
Government of Pakistan should take a firm stand and not to involve the President's office in co-signing. This is a clear violation of IMF mandate. Instead of asking IMF a bail-out package, get rid of corruption at the highest level.
Perhaps the IMF has little, OR NO, confidence in the financial skills of the current PPP coalition government and doesn't see a long-term future for these financial illiterates. As for the requirement that the President sign any future agreement as guarantor, ít makes perfect sense for a person who ultimately makes the decisions be held accountable for there implementation.
This govt has obviously lost all credibility and the IMF is just trying to ensure its assistance does not turn into a bad loan in that its funds end up in Zardari's offshore havens instead of being put to work for the people.
When a government "disowns" the commitments made by the Finance Minister, the IMF really has no choice but to seek additional guarantees. There might be a time when the Military leadership will also be asked to countersign on IMF proposals.
Where in the world does IMF team meet the political parties. Government functionaries who deal with IMF and allowed such meetings should be taken to task.
IMF's acting smart !
When Pakistanis do not respect their govt who in the world is going to do that? When the SC insists that a low Swiss court should start the trial of sitting president of Pakistan, then any court in the world could try any future Pakistani leader of army official. Actually we are telling the world that nobody in our govt has any powers or immunity. Let us hope that all foreign organizations continue to deal directly with as many groups and paid govt servants as they want.
Better take what ur getting now ... otherwise u will loose that chance too ...