Pakistan is eager to negotiate a ‘new’ agreement with the IMF.
When a fund official meddles in domestic politics, the government condemns them.
ISLAMABAD: Prime Minister Shehbaz Sharif has told International Monetary Fund (IMF) Managing Director Kristalina Georgieva of Pakistan’s determination to secure a new bailout amid a stalemate in receiving a bailout from the IMF.
On Wednesday, Minister of State for Finance and Revenue Dr. Aisha Ghaus Pasha commented on the political issue, saying that IMF mission leader Nathan Porter should not “interfere in politically domestic” matters because of his role as an outsider.
The Express Tribune reports that during a phone call with the IMF’s managing director over the weekend, the prime minister of Pakistan disclosed his country’s plans to sign a second rescue agreement.
The present $6.5 billion Pakistani plan was derailed, and the seven months of work to resuscitate it had failed. On June 30th, the programme will no longer be active.
According to the sources, the IMF director agreed with the prime minister that a new package was necessary. Many in the diplomatic community and in the international financial system believe that Pakistan would default unless it receives fresh aid from the IMF.
If Pakistan is to repay its $25 billion in debt in the coming fiscal year, it will need the protection of the IMF. Under the condition of anonymity, a senior official from the Ministry of Finance confirmed that the Ministry shares the view that the follow-up programme is necessary to reinforce and expand upon the reforms undertaken during the current programme.
The position of Finance Minister Ishaq Dar, who not too long ago advocated that Pakistan should quit being dependent on the IMF, is at odds with the prime minister’s newest move to seek a fresh arrangement. A minority of the economic team, however, believes that the IMF programme is essential at the present time.
According to the sources, the managing director of the IMF stressed the importance of Pakistan fulfilling the outstanding terms swiftly, including securing foreign financing and leaving the exchange rate on market forces by abolishing administrative controls.
The head of the IMF’s mission in Pakistan, Nathan Porter, has echoed these sentiments, saying in a statement that Pakistan must publish its budget for the coming fiscal year in accordance with the IMF framework and provide clarification on the exchange rate policy.
After attending a meeting of a parliamentary committee, Dr. Aisha Pasha, the Minister of State for Finance, responded to a question by saying, “First, we want to take the current programme to the end, only then will we discuss how to move forward from there.”
In an effort to save the programme before it was set to expire at the end of June, the prime minister had called the managing director of the IMF to ask for her help.
The government’s constitutional term ends on August 12, and it remains to be seen if the current administration or an interim administration would begin negotiations with the IMF over the new plan before that date.
Dr. Pasha strongly criticised the IMF’s meddling in Pakistani politics. The minister of state remarked in response to a query, “Nathan Porter should not interfere in Pakistan’s political and domestic affairs.” The political challenges that Porter addressed were extraordinary, she said.
This is really unusual, as our government actively promotes democratic ideals. We are moving forward in accordance with the rule of law and want all institutions to operate within the bounds of the Constitution,” she said.
Nathan Porter’s remark from Monday, which read as follows: “we take note of the recent political developments and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and the rule of law,” prompted her response.
Dr. Pasha told the press that the government has not received any “official communication” from the IMF regarding the organization’s observations on political matters in Pakistan. However, she clarified that the multilateral lender “does not give such statements where they speak about a country’s political matters.”
Dr. Pasha highlighted that the government’s technical discussions with the IMF continued, and that some progress had been made.
Dr. Pasha responded to a question about whether Ishaq Dar approved of the prime minister calling the head of the International Monetary Fund by saying that everyone on the economic team agreed with the decision and that the prime minister was simply representing Pakistan.
Dr. Pasha noted that the prime minister had spoken for the government as a whole when he announced that Pakistan wanted to finish the current programme.
In response to another inquiry, Dr. Pasha stated that Pakistan had disclosed its budget figures and that the IMF had discussed the difficulties relating to the opening of letter of credits for imports with the SBP.
According to the sources, the Ministry of Finance disclosed the already reported data and proposed a 52% increase over the approved budget for this year. Outlays of roughly Rs14.6 trillion have been proposed by the Ministry of Finance for the upcoming fiscal year, with a corresponding federal budget deficit of around Rs7.8 trillion.
Dr. Pasha stated that the current schedule could not be prolonged any further. Dr. Pasha, discussing the PM-MD call, said, “the government has conveyed to the IMF that continuous delay in the revival of the programme is not in the interest of Pakistan and the IMF.” She expressed the need for an end to the ambiguity.
That the administration is committed to seeing the programme through to its conclusion was made abundantly plain to IMF Managing Director Kristalina Georgieva. She went on to say, “The head of the IMF has also made it clear that she wants to see progress.”