Caretaker finance minister agrees to hold talks with IMF

ISLAMABAD: After taking detailed review of economic challenges, the newly sworn-in Minister for Finance Dr Shamshad Akhtar on Tuesday gave her green signal for holding policy level dialogue with the IMF under Article IV consultation and the Fund mission was expected to visit Islamabad for gauging the economic health of the country by end of the ongoing month.

“No dates have been yet finalized for holding Article IV consultations. Probably Islamabad and IMF Resident Office will establish contacts to work out schedule of upcoming policy dialogue next week. This dialogue is expected to take place by the end of ongoing month,” top official sources confirmed to The News here on Tuesday.

Earlier, the IMF’s Resident chief in Pakistan had told The News that the Fund mission could visit Pakistan in June 2018 for holding article IV consultation if the caretaker government extended formal request to undertake this dialogue with them.

The article IV consultation does not mean starting negotiation for any fresh bailout package as it is done with all member countries once in a year even if the country is under the IMF programme or without the Fund programme. However, this process of holding article IV consultation will determine the actual economic health of the country.

After gauging the actual economic health then informed decision of approaching the IMF can be taken accordingly by authorities here in Pakistan. Dr Shamshad Akhtar has assumed her charge at a time when the country was facing numerous challenges on account of twin deficits including yawning budget deficit and current account deficit.

The increasing worrisome for Pakistan will be starting repayments of the IMF on account of obtained loans in previous years as Islamabad will have to pay $190 million outstanding amount in June (the ongoing month). Another $490 million will become due in the coming fiscal year 2018-19 starting from July 1, 2018 and exactly this amount of the IMF will be due in September 2018. Pakistan will have to pay back $879 million in 2019-20, $1.158 billion in 2020-21, $1.174 billion in 2021-22 and $1.2 billion by 2022-2023.

“It was hours’ long briefings extended to newly stalled Finance Minister in which it was decided that comprehensive policy would be devised to tackle internal and external accounts of the economy,” top official sources told The News after attending maiden session of briefing here on Tuesday. The Minister also asked the authorities to prepare strategy for upcoming plenary session meeting of Financial Action Task Force (FATF) expected to be held this month whereby Islamabad will have to put all its acts together to avoid falling into grey list.

“On the basis of policy prescriptions outlined by the IMF through the process of holding article IV consultations then Islamabad will link its decision for approaching with the IMF in formal manner for seeking another bailout package.

After taking her oath as Federal Minister for Finance, Revenues, Economic Affairs and Planning Division as well as additional charges of different other economic ministries, Dr Shamshad Akhtar came to Q Block (Finance Ministry) at her office and assumed her charge.

Instead of convening meeting at 4th floor of Q Block, she preferred to come downstairs on second floor (where Finance Secretary’s office is located) to chair maiden session of briefing from the economic team led by Secretary Finance Arif Ahmed Khan who largely dwelt upon the lingering problem of twin deficits for the current fiscal year and projections on short to medium term basis.

The IMF has projected gross financing gap of $24.4 billion for outgoing fiscal year with the current account deficit projected at $15.6 billion. The current account deficit, which had already crossed $14.2 billion for first ten months (July-April) period it might cross $16 to $17 billion till end June 2018. The IMF projections further showed that the available financing stood at $20.7 billion so remaining foreign currency reserves would be depleted which had already caused a heavy toll on the economy in the outgoing fiscal year.