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Monday April 15, 2024

PM Shehbaz seeks fresh IMF programme after taking charge

Premier says economic revival top priority of PML-N government

By Ayaz Akbar Yousafzai
March 04, 2024
Prime Minister Shehbaz Sharif chairs a meeting in Islamabad on March 4, 2024. — X/GovtofPakistan
Prime Minister Shehbaz Sharif chairs a meeting in Islamabad on March 4, 2024. — X/GovtofPakistan

ISLAMABAD: Prime Minister Shehbaz Sharif Monday directed authorities to initiate talks with the International Monetary Fund (IMF) for a fresh Extending Fund Facility (EFF) as the newly-elected government seeks to steer the country out of an economic quagmire.

Shehbaz, the only politician to be elected as the prime minister twice consecutively, took charge of his office earlier today and held his first meeting on the economy hours later.

The secretary of finance, present during the meeting being chaired by the prime minister, briefed Shehbaz on the current economic situation of the country, which is passing through one of the most testing times — both politically and economically.

"We were given a mandate to improve the country’s economy [...] this is our government’s top priority," said the premier in the meeting in which he ordered formulating emergency steps for economic revival.

Economic experts have suggested that the new government enter a fresh IMF programme as the economy remains in dire straits with no quick fixes available.

Prime Minister Shehbaz, during electioneering, had also made it clear that if his party, the Pakistan Muslim League-Nawaz (PML-N), were to come into power, it would not hold back and enter into a new programme with the Fund.

It emerged last month that Pakistan planned to seek a new loan of at least $6 billion from the IMF to help the new government repay billions in debt due this year, Bloomberg reported citing a Pakistani official, adding that the talks with the global lender were likely to commence in March or April.

The country averted default last summer thanks to a short-term IMF bailout, but the programme expires this month, and a new government will have to negotiate a long-term arrangement to keep the $350-billion economy stable.

During the huddle, the premier vowed to provide maximum facilities to the business community and promote investments by adopting effective policies and legislation, as per the statement.

In a briefing, the premier was told that the Federal Board of Revenue (FBR) cleared tax refunds worth Rs65 billion. To this, PM Shehbaz said that those taxpayers who were working for betterment of the national economy and positively contributing to exports would be encouraged at state level.

He emphasised “automation” for maintaing transparency in the highest tax collection body. Premier Shehbaz ordered to immediately commence work on automation of the FBR, and other institutions.

PM directs to expedite privatisation

Besides giving instructions on reform plans for institutions, the premier issued special directives to expedite the implementation of the privatisation plan for loss-making state-owned entities to avoid fiscal burden on the national economy.

Elected governments have always shied away from undertaking unpopular reforms like the privatisation of the SOEs whose accumulated losses were Rs500 billion ($1.74 billion) in 2020, including the sale of Pakistan International Airlines (PIA).

However, the country agreed in June 2023 to overhaul loss-making state entities in a bid to avert deep economic crisis.

In September last year, the caretaker setup had earmarked 10 state-owned companies, whose losses are burning a hole in government finances, for privatisation as it strives to deliver reforms under its IMF bailout package which is going to expire this month.

During the meeting, the PM also ordered formulation of a high-level committee to devise a comprehensive strategy to reduce perks of the government board members.

Reviewing steps to address the longstanding issue of power and gas thefts, PM Shehbaz issued orders for devising a strategy to introduce smart metering in both sectors to reduce line losses.

He also stressed on effective strategies to financially empower youth by providing loans from banks, other financial institutions for small and medium-level businesses.

A strategy was also sought by the premier to reduce government expenditures by merging or closing institutions that are not required for the functioning of the state machinery.

He also directed to further strengthen the Special Investment Facilitation Council (SIFC) whose establishment was a “very important step for economic stability”.

According to the PMO statement, PM Shehbaz scheduled its next session on the FBR-related matters. The premier promised emergency steps for facilitating the nation besides assuring to provide maximum assistance to the business community, investors, and youth of the country.