$11bn bilateral assistance being sought: Shamshad

ISLAMABAD: Caretaker Minister for Finance Dr Shamshad Akhtar on Thursday informed the Senate Standing Committee on Finance that the government requested from bilateral donors to manage $11 billion financing besides it also sought oil facility on deferred payment.

However, she did not explain that this request was made to bilateral donors such as China, the Kingdom of Saudi Arabia, UAE, and others for granting rollovers, SAFE deposits, and re-financing of outstanding loans, which amounted to $11 billion for the current fiscal year.

Pakistan has also made a request to KSA to grant continuation of the oil facility on deferred payment for the current fiscal year as the existing oil facility is going to expire in December 2023.

The Senate Standing Committee on Finance met under the Chairmanship of Senator Saleem Mandviwalla at the Parliament House on Thursday. Initially, the meeting was convened in-camera but finally granted permission to journalists to cover the proceedings of the Senate panel.

The parliamentarians raised different questions on the dwindling economic situation after which the minister for finance stated that they were working to secure external financing of $20 billion.

“To meet the external financing requirements, we are working to secure concessional funding of $6.3 billion from multilateral, including World Bank, ADB and IsDB, said Dr Shamshad, adding, $3 billion funding from IMF and bilateral assistance of around $10 billion has already been approved,” she added.

The minister said that Pakistan experienced boom and bust cycles as the growth trajectory remained volatile irrespective of the political divide. “I am not a politician but as a technocrat, this pattern needs to be reversed. There are structural shortcomings that resulted in surfacing the fiscal deficit and current account deficits. Until and unless the structural problems will not be resolved these deficits will not be overcome,” she added.

She cited the example of the unbridled energy sector and its accumulated circular debt and stated that the circular debt continued rising and the governments in the past could not recover the cost of energy generation. “Some big elephants remained there whereby the circular debt of power and gas could not be tackled,” she said and added that the government never passed on prices by taking into account different excuses. “We know it’s painful but there is no other way,” she added.

She said that all political parties would have to sit together to devise the National Action Plan and cited an example that the retailers would have to bring in tax net. She said that there was lingering confusion about whether to pursue export earnings or opt for import substitution adding that there was a need to boost exports. The export refinance, she said, was an old model so it will have to be abandoned. She said that the export targets would have to fetch $50 to $75 billion on a per annum basis and there was a need to learn how Korea and Thailand did it in the recent past. She was of the view that the East Asian economies had done wonderful while remaining as import-dependent countries.

“We will have to tighten our belts in order to drift the difficult situation” she said and added that Pakistan would have to implement all tough conditions of the IMF under the existing program and if found hard to implement then should not go for getting IMF program.

“If there is no IMF program there will be no inflows” she further said.

The minister also blamed the media for wrongly interpreting her statements but did not mention specific instances. She was of the view that the government came up with overhauling of state owned enterprises in line with the IMF’s conditions.

The minister said that there were Rs3 trillion stuck up at different legal forums so there was a need on part of political parties to sit together to devise Alternate Dispute Resolution Committees (ADRC) mechanism. The minister was of the view that she would not talk about exchange rate because it was the domain the State Bank of Pakistan. The exchange rate is determined on demand and supply basis. At present, the foreign exchange reserves stood at $7.6 billion held by the SBP.

Under the IMF’s SBA program, she said the authorities are committed to increasing SBP reserves to $9 billion (2.3 months of import cover). The government targets an increase in SBP forex reserves to $12 billion (3 months of import cover) by June 2024 based on higher official inflows and pick up in FDI under the SIFC.