Thursday September 28, 2023

IMF verifying from KSA, UAE on financing before staff-level deal

Only outstanding issue is confirmation on external financing from bilateral countries, Minister of State for Finance Dr Aisha Ghaus Pasha

March 30, 2023
International Monetary Fund. — AFP/File
International Monetary Fund. — AFP/File

ISLAMABAD: The IMF is undertaking verification from bilateral countries, including Saudi Arabia and the UAE, on the external financing needs of Pakistan amidst indications that financial assistance is expected from bilateral friends, paving the way for signing the staff-level agreement.

Speaking to journalists after attending the Senate Standing Committee on Finance meeting, Minister of State for Finance Dr Aisha Ghaus Pasha said that the parleys with the IMF were continuing and now the only outstanding issue remained of the lender getting confirmation on external financing from bilateral countries, including Saudi Arabia and the UAE, which was underway.

“There are indications that financial assistance is expected from bilateral friends very soon, that will help finalise the staff-level agreement with the IMF,” she said. There is no suggestion of subsidy on petroleum products and the Petroleum Division had suggested cross-subsidies on petroleum products, which is not workable, she clarified.

Meanwhile, the Chairman of the Pakistan Foreign Exchange Association, Malik Bostan, told the Senate panel that they could provide $1 billion every month to the government over the next two years, after which there would be no need for the IMF.

In the same breath, he also sought relaxation from the government and the SBP to do away with the CNIC requirement for getting $15,000. He also said that around $180 billion were sent abroad in the last 30 years. He said that they had brought $10 billion into the system after the nuclear tests of 1998. The Senate Standing Committee on Finance held its meeting here on Wednesday under the chairmanship of Senator Saleem Mandviwalla, whereby Minister of State for Finance Aisha Ghaus Pasha said that external financing was the only hitch in the completion of the Ninth Review and hoped that it would be completed soon and there was a positive development from the friendly countries, including China, Saudi Arabia and the UAE.

The minister said that the process was taking time because the IMF was getting confirmation from friendly countries and after verification, the deal would be finalised. She claimed that all three countries had extended full support.

Senator Mohsin Aziz lamented the delay in the deal despite dire economic conditions of inflation, joblessness and halting of trade and industry.

Senator Farooq H Naek inquired about the newly-introduced petrol subsidy by the government, to which the minister replied that only a plan for petrol subsidy was being worked out. Naek recommended drafting a regular programme on food subsidies for the lower middle class. He emphasised that food inflation was high and the government should consider providing food subsidies instead of free food. He said that distributing food would only encourage the practice of begging among the masses.

At the outset of the meeting, the Senate Finance Committee took a detailed briefing from the chairman of the Exchange Companies Association of Pakistan on the issue of foreign exchange and dollar instability. The association discussed various recommendations and assured that if policies are revised and restrictions are relaxed keeping in view the current economic situation of the country, dollar stability could be achieved. He said that Pakistan would become economically stable if the focus was on agriculture and natural resources.

The Exchange Companies Association stressed on the cessation of Afghan Transit and the allowance by the State Bank to deposit up to $10,000 without verification. The exchange companies’ association claimed that they had brought four billion dollars into the country last year and could bring one billion dollars every month.

The question by Senator Mushtaq Ahmed on the comparative details of federal excise duty and retail price of locally manufactured cigarettes and imported cigarettes was disposed of.

It was briefed that according to restriction No03 of the First Schedule to the Federal Excise Act, 2005, the minimum selling price of any brand shall not be less than 60 percent of Rs9,000. The committee was briefed on the best probable solutions under the Anti-Money Laundering Act.

The DG Intelligence and Investigation estimated that a total of 125 cases had been registered from 2016 to date. He said that the intel was of such a nature that it demanded to monitor. However, the FBR is discharging cases against individuals who have complied with the initial proceedings.

It was also revealed that directors have been instructed to review all 125 pending cases wherein FIRs have been filed and which were under investigation. They have also been instructed to differentiate whether the said cases involve only tax evasion or tax evasion coupled with money laundering. The issue was disposed of with the direction that tax evasion should not be associated with money laundering and reasonable amounts should be fixed for the threshold of money laundering.

While discussing the State Bank report on banks charging extra US dollar rates for the opening of LCs, the SBP officials informed the committee that investigation had been concluded and the bank was in deliberations with the Finance Division to determine whether action should be fiscal or regulatory.

However, he assured the committee that action would be taken soon. The committee chairman directed the SBP to submit a report on the issue in the next two weeks.

Moreover, Senator Saleem Mandviwalla claimed that plenty of complaints had been received that banks have refused to make payments even after the opening of LCs. The SBP officials said they are monitoring the situation and banks are being made to open LCs for all necessary items.