Pakistan Wants to Sign A “NEW” IMF Agreement

ISLAMABAD: Shehbaz Sharif, the prime minister, has informed Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), of Pakistan’s intention to obtain a new bailout amid a deadlock about an IMF bailout. Additionally, IMF mission leader Nathan Porter’s Wednesday comment on the political climate of the nation was condemned by Minister of State for Finance and Revenue Dr. Aisha Ghaus Pasha, who said he shouldn’t “interfere in politically domestic” matters. According to sources who spoke with The Express Tribune, the prime minister told the managing director of the IMF over the weekend that Pakistan intended to sign a subsequent bailout plan. Pakistan’s current $6.5 billion plan was stalled, and efforts made over the past seven months to resuscitate it failed to bear fruit. The programme will be finished on June 30. According to the sources, the IMF managing director agreed with the premier that a second package was necessary.

The diplomatic community and international financial organisations believe that Pakistan needs a fresh IMF package in order to avoid default. Pakistan has to be covered by the IMF if it wants to pay back its $25 billion debt in the upcoming fiscal year. According to a senior ministry official who spoke on the record on the condition of anonymity, the ministry of finance also believes that the follow-up plan is necessary to strengthen and expand upon the reforms started during the present programme. However, the prime minister’s most recent effort to reach a new agreement is at odds with Finance Minister Ishaq Dar’s position, who not long ago advocated for Pakistan to quit depending on the IMF. However, a few members of the economic team believe that the IMF programme is currently necessary. According to the sources, the managing director of the IMF highlighted that Pakistan should swiftly meet all outstanding conditions, particularly by securing foreign loans and releasing administrative controls to allow the market to determine the exchange rate. In a statement, Nathan Porter, the head of the IMF mission in Pakistan, reaffirmed these opinions and stressed that Pakistan should prepare its budget for the upcoming fiscal year in accordance with IMF guidelines and be transparent about its exchange rate strategy.

Minister of State

Dr. Aisha Pasha, the Minister of State for Finance, responded to a query after attending a meeting of a parliamentary committee, saying, “First, we want to see the current programme through to the end, only then will we discuss how to move forward from that point.” The IMF managing director had been contacted by the prime minister to request her assistance in reviving the programme, particularly in completing the next 9th review before the program’s expiration at the end of June. On August 12, the government’s constitutionally mandated term will likewise come to an end. It remains to be seen whether this administration or the temporary one will start discussions with the IMF over the new programme. The IMF’s interference in Pakistan’s internal affairs was denounced by Dr. Pasha. In response to a query, the minister of state said, “Nathan Porter should not meddle in Pakistan’s domestic and political affairs.” Porter’s comments regarding the political issues were described by her as “extraordinary” by her “Considering that we (the government) support democracy, this is an amazing event. We want the rule of law to prevail and for all institutions to operate within the constraints of the Constitution, she said.

She responded to Nathan Porter’s declaration from the previous day, which read in part: “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.” Dr. Pasha claimed in a television interview that the government had not received any “official communication” from the IMF regarding its opinions on Pakistan’s political issues. However, she asserted that the multilateral lender “does not give such statements where they speak about a country’s political matters”.

Dr. Pasha continued, noting that the government and IMF were still in communication on a technical basis. In response to a query about whether Ishaq Dar approved of the prime minister’s decision to call the managing director of the IMF on the phone, Dr. Pasha stated that the decision had the support of the entire economic team and that the prime minister was speaking on behalf of Pakistan.

Dr. Pasha stated that the prime minister “speaks on behalf of the entire government” and made it clear that Pakistan wants to finish the current programme. In response to a different query, Dr. Pasha stated that Pakistan had disclosed its budget figures and that the IMF had spoken with the SBP on concerns regarding the opening of letter of credits for imports. According to the sources, the Ministry of Finance revealed the figures that have already been published and advised an increase of 52% over the allocated budget for this year. For the upcoming fiscal year, the Ministry of Finance has proposed budget expenditures of approximately Rs 14.6 trillion with an estimated Rs 7.8 trillion federal budget deficit. There was no chance for the current project to be extended further.

According to Dr. Pasha. Dr. Pasha stated that “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” when speaking about the PM-MD call. She claimed that the ambiguity needed to be resolved.  “We have made it very clear to Kristalina Georgieva, managing director of the IMF, that the government intends to finish the programme. The head of the IMF has stated that she wants to see progress as well,” she continued.

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