PM's adviser underscores role of friendly nations behind 'relaxed' IMF conditions

Veteran politician's remarks refer to pledges made by Saudi Arab, UAE and China in recent months

By Business Desk
June 17, 2024
International Monetary Fund logo is seen inside the headquarters at the end of the IMF/World Bank annual meetings in Washington, US, October 9, 2016. — Reuters

Adviser to Prime Minister on Political Affairs Rana Sanaullah Monday underscored the crucial role played by friendly country whose pledge to assist Islamabad resulted in relaxed conditions of the International Monetary Fund (IMF).

Speaking at a press conference in Faisalabad, Sanaullah said: "This time, the credit [...] for getting the conditions relaxed goes to our friendly countries as stated by Prime Minister Shehbaz Sharif."

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"The nations that helped include China, Saudi Arabia, and UAE. Their promises and I would like to call it 'hand holding' would ensure that [the previous] scenario does not repeat," he added.

The aviser's remarks come after the KSA and UAEsigned multi-billion dollar memorandums of understanding with Pakistan in recent months with PM Shehbazstressing that the country would not seek loans, but rather investments to boost the economy.

The PDM-led coalition government, which came into power in April 2022 and served till August 2023, had to take a slew of measures, including raising petrol prices to historic highs, and increasing power and gas tariffs, to secure a bailout, which skyrocketed inflation.

Sanaullah noted that during the 16 months when the PDM was in power, the IMF's conditions were stricter, but he hoped that it would not be the case this time around.

With Shehbaz again at the helm and Pakistan desperately needing another IMF bailout, the government is now taking steps to secure a longer programme from the lender.

Experts have said that the government's plan to raise taxes in its 2024-25 budget and boost state revenues will help it win approval from the IMF for a loan to stave off another economic meltdown, but could fuel public anger.

The PML-N-led government has set a challenging tax revenue target of Rs13 trillion for the year starting July 1, a near-40% jump from the current year, and a sharp drop in its fiscal deficit to 5.9% of GDP from 7.4% for the current year.

The federal government had to reduce the fiscal deficit as part of negotiations with the IMF, with which it is discussing a loan of $6-8 billion, as it seeks to avert a debt default for an economy growing at the slowest pace in the region.

"The budget is enough to get an IMF programme, as long as ... the budget is passed in the way it is presented," Miftah Ismail, who as then-finance minister successfully negotiated the revival of the last Extended Fund Facility (EFF) programme in 2022, told Reuters.

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