IMF programme or not, Pakistan won’t default: Dar

ISLAMABAD: Minister for Finance Ishaq Dar on Thursday said that Pakistan would not default on repayment of its foreign obligation whether there would be an IMF programme or not.

Without mentioning the name of any specific country or any international leader, Dar also said that some global players inquired about melting down of the country. “But let me clarify that Pakistan would meet all its external obligations well before the stipulated timeframe.”

The delay in signing of the IMF programme, he said, would not result in a default-like situation. “Let me assure you with clarity Pakistan will not default whether there will be an IMF programme or no programme”, he said in his address on the last session of Islamabad Security Dialogue here at the Pak-China Friendship Center on Thursday.

The Staff Level Agreement (SLA) with the IMF should have been done much earlier, he said and added that the talks had concluded on February 9, 2023 and the government fulfilled the condition at the cost of its political capital.

He said he had experienced such a difficult situation thrice. The first time was in 1998 when Pakistan decided to detonate nuclear devices and on November 6, 1998 the IMF programme was revived after six months.

In June 1999, the country possessed foreign exchange reserves of four-month imports. “Now we have halted the declining economy and it will be reversed towards a growth trajectory,” he assured.

When asked by one of the participants about the viewpoint of former finance minister Miftah Ismail who said the economy suffered more after his replacement, Ishaq Dar did not reply directly and said it was the discretion of the government to bring a change as an individual did not matter.

On the IMF programme, he said the IMF staff was awaiting materialising of some bilateral partners’ financial assistance promised on the occasion of the last review of the Fund and before the Staff Level Agreement. He said the last government signed the IMF programme in 2019 and keeping in view the sovereign commitment, the PDM-led government took tough political decisions such as withdrawal of subsidies for fuel and power sector. The government, he said, undertook the toughest reforms under the IMF and World Bank programmes.

“There is no quick magic wand,” he said and added that Pakistan’s nuclear programme played a key role in defending the country in the aftermath of 9/11 scenario. He was of the view that now suspicions were being spread about the looming default as one credit rating agency talked about $3.7 billion external debt repayment for May and June 2023. He said that he had gone for clarifying the situation, then the next day another credit rating agency came up with the version that the country could not repay its obligation from July to December 2023.

He deplored that the country’s economy was once moving towards the joining the club of G-20 but now within a period of five to six years, it was the 47th economy of the world. It was heart breaking to see the country’s economy slide into reverse.

He said he was the one who had proposed the National Income Support Program (NISP) in 2007-8, which was later on named as Benazir Income Support Program (BISP) but the PMLN had to come out of the government for the restoration of judiciary.

To another query, he said that there was a need to strike a balance between security-defense expenditures and development and trade related investment. A country like Pakistan, he said, cannot compromise one at the cost of the other.

He said the security expenditures went up during the tenure of the last PMLN led regime from 2013 to 2018 while the PSDP funding also tripled during the same period.