“The IMF’s deputy managing director has promised me to support Pakistan’s request for an additional $2 billion in loans at the IMF’s Executive Board meeting on September 4,” says Dar. PHOTO: APP
This was revealed by Finance Minister Ishaq Dar on the fringes of a microfinance summit on Monday. He predicted a bumpy road ahead for the national economy, despite the $5.3 billion assistance from the IMF.
“The IMF’s deputy managing director has promised me to support Pakistan’s request for an additional $2 billion in loans at the IMF’s Executive Board meeting on September 4,” said Dar. The $5.4 billion bailout package is also expected to be approved in the meeting.
Dar also revealed that he has requested the Fund to give Pakistan $3 billion in the first year of three-year programme so that the country could comfortably return the outstanding dues of more than $3 billion that will be maturing later this year. He said that in the next fiscal year Pakistan will return $1.2 billion more to the IMF.
Despite Pakistan’s wish for a front cash-loaded programme, the chances are high that the IMF will give each tranche after reviewing progress on the agreed agenda, sources said. Learning from previous experience of repeated failed programmes, the IMF is unlikely to take the risk this time around, they added.
“I’ve also proposed to the IMF management that from the second year of the programme the tranches may be released on a quarterly basis,” said Dar.
Both, the IMF and Pakistan agreed to a $5.3 billion last week, but before qualifying for the programme, the country has to implement about half a dozen preconditions followed by a three-year roadmap of reforms.
According to sources, the biggest threat to the programme will be the Rs2.475 trillion tax collection target which will have to show 26% growth to hit the ambitious goalpost. Any shortfall in revenues will derail the IMF programme, sources said.
Dar said Pakistan has already started following the roadmap agreed with the IMF and the world has also started giving positive signals. “After talks with the IMF, international confidence has been restored and its fresh report on Monday, Moody’s said Pakistan is in the right direction.”
Published in The Express Tribune, July 9th, 2013.
COMMENTS (33)
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It is advisable that the government should refrain from making promises it cannot keep as this would only raise undue expectations. Also, people should not be kept in the dark about national issues that affect everyone, such as the real state of the economy. We have witnessed how the government has had to take tough fiscal measures, and will further have to in the future, in conformity with the reforms prescribed in the loan programme. This is in sharp contrast to the dreamy picture that was being portrayed during the election campaign. The government should take necessary steps to educate the people about the current economic situation and the rationale behind the reforms that need to be introduced in order to achieve long-term economic growth.
@Hedgefunder:
And force our countrymen to bring back the stashed dollars in Swiis banks amounting to $ 97 billion....this will suffice for all the problems....
@meekal a ahmed:
"Why is the FM of Pakistan talking to the DMD? He should only talk to the MD of the IMF."
The reason for this is that DMD is a Chinese national named Zhu Min. The Pak Establishment, apparently well versed and groomed in Sifarish system, believed that because of the "sweeter than honey, taller than Himalayas, deeper than the ocean" relationship that Pakistan believes it has with the Chinese, this Chinese DMD would swing the deal in Pak's favor.
This is quite bizarre! Why didn't Pakistan ask for $7.3 billions to start with instead of the $5.3B that was discussed with the recently concluded talks with the IMF?
@Jean: LOL !!!!! The Pakistanis have already been at it with their requests in Middle east for decades and Those states have got rather tired of them, hence Egypt is rather new and not likely to be in same league as this Nuclear State that can not even provide basic Electricity to its people on daily basis ! That sweeter than Honey friend is only going to do anything ever, if its in their long term interests, sadly Pakistanis will never understand this.
@Hedgefunder: Don't tell this news to nawaz sherif as he will get dissapointed.Sweeter than honey friend is a waste of time as they don't help in need.So its a competition between egypt and pakistan, who is getting more aid??
Just heard that Saudis, have given Egypt $5 billion in AID ! Perhaps the PM should have headed there first instead of his "sweeter than honey" friend ! He may have impressed them with all the new projects and how this time things are going to be different too, in terms of how the Country is going to be managed. This time forget the repayments, but consider defaults towards end of tenure !
In which cave your all weather friend china is hiding??
We have been treated very badly all over the world.I am ashamed to be called as 'Pakistani'
@gp65:
Thank you for your kind words. You flatter me.
I think it is a bit unusual after a mission has just concluded it's discussions with a member-country during which access to IMF money must have been discussed, that we should be writing letters to the DMD of the IMF (and not even the MD) to ask for more money and a rephrasing.
It is unprecedented -- and quite bizarre.
You pick up the phone and call our Executive Director in the IMF (whom we elected) to talk to his colleagues on the Board as well as senior management and/or, if relations are good, ask him to go and see the MD. Her office is only one flight of stairs up!
This by-passes our Executive Director and he must be quite miffed -- apart from being blind-sided/caught off-guard.
For the record, this never happened in my years in the IMF. But maybe times have changed?
One essential disqualification/drawback of the beggars is that they are non-productive.They are victims of a vicious circle of consumption sans production,which renders them to be begging and begging all the time,causing them to become lethargic and immune to all types of insults,and indifferent to self respect
It is surprising that we are trying to broaden our tax net on the instructions and pressure of IMF. What has happened to Pakistan in last 65 years are shameful. We have failed militarily, financially and commercially. Its is high time that we become sincere to the country's interest and start taking actions in the betterment of countries ourselves rather than on pressure of a lending institutions. Please ensure that corruption is tackled and all the state companies/organizations like PIA, Wapda and Railway are brought on the right track and than sold to the privatize companies at the maximum price to provide better services to the people of Pakistan.
Do we have to read these nuggets of wisdom for the next five years?
Why is the FM of Pakistan talking to the DMD?
He should only talk to the MD of the IMF.
@TH: Or if they are short on time, listen to his video interview.
@hasan:
"Since 47, we have shamefully received 40 billion dollars from US, the highest cumulative aid may be"
Actually, the US has given close to $250B to Pakistan (assuming a decent return rate on the aid) in today's dollars.
So I suppose this additional loan too will be demanded by Minister Dar, on his terms and not IMF's own criteria ! Learn to collect TAXES, and Pakistan won't need many Loans then !
I suggest you all to read the book " confessions on an economic hitman". Whatever you are arguing about the actual intentions of US and IMF are actually verified by a former IMF man himself.
@Gujesh:
there are many potential big buyers sir, who will do the much needed re-org and turn it around for profit and make the workers more efficient and honest :)
@hasan:
Very well said.
Taking new loan to repay old loan is not a new thing. As a short term measure it is OK. Many compnies resort to it. These companies are cash starved, not doing well and on the verge of becoming sick. If effective steps are not taken, such companies are ultimately taken over by big companies. Pakistan has to act fast.
Road ahead may be bumpy.... ++++++++++++++++++++ But the FM is committed to set the economy right in 6 months. Pls live upto that.
@optimistic: You need political will to bring about any change, Pakistani economy is hostage to incompetent beaurucrats and will remain so unless a new model of governance is presented. Look at how Imran Khan has been managing his party, repremanding any transgressions immediately. That is how a competent political party is run. If we had given him reigns of the country, he would have weeded out all the rotten eggs one by one. But, secretly, we all like how Pakistan is running, except the poor.
ET, this is an old story.
The IMF loan is given to fulfil certain well defimed objectives . Whatever amount has been assured is just provisional ,it's delivery will depend upon the progress of Pakistan in the direction of ensuring world peace . The flow of money could be from China if it is realy being used for the required change and welfare of existing Pakistani society but if it aims to polarization of power and streategies against the forces operating to bring desired change in the region then the assured money delivery may be diverted accordingly to counter the evil design of such friendship . So the new govt has to be very careful and clear in her objective to eradicate terrorism and to ensure peace in the entire reggion .
Since 47, we have shamefully received 40 billion dollars from US, the highest cumulative aid may be. Other than that, we have taken 18 tranches from IMF. Now we are begging for close to 7.5 B. Other than that, we beggars have taken loans from WB, ADB, Middle eastern countries and probably all other international sources. Govt is printing 2 billion ruppees per day. This country has really earned its Failed State status. What a shame as a green passport holder, whereever we go, people look at our passports and think that they have paid hard earned taxes that was given to ungrateful troublemakers like us. Shame on us.
what was that again.... Aye tahir lahooti?
Economic Blast = More IMF Loans
ppp government let Pakistan in such a worse condition. .hope PML-N is able to revive the economy
Why is pakistan asking for $$ from the US controlled IMF? Why not 'sweeter' than honey, honey?
Yaah! Economic explosion!!!
we take loan to pay off loans.....i think Pakistan has a great financial team.. i wonder what happened to the money paid to scheme 'mulk sawaraoo karz utaroo' na karz utraa aur mulk kai halat aur kharab hotae gai..