‘Going to IMF is the first thing upcoming govt will do’

KARACHI: Pakistan may again seek help from the International Monetary Fund (IMF) as its finances may get insufficient to meet its external trade and debt repayment needs, but not before the upcoming general elections, a senior business leader said on Wednesday.

Speaking at the Jang Forum, Arif Habib, chairman, Arif Habib Group, said surging current account deficit was the actual problem haunting Pakistan’s economy and no other option seemed workable.

“Whoever should form the government in 2018, Pakistan would need to go for another IMF programme,” Arif Habib said. Former federal minister Sohail Wajahat highlighted the declining commodity prices in the world market and said exports could not support the deficit in the short-run. “Moreover, foreign direct investment (FDI) flows are not likely to continue upward momentum, as reporting of engineered statistics has created some trust issues among the foreign investors.”

He added, “None of the data provided by government or any other agency can be relied upon, even IMF once fined Pakistan for reporting inaccurate statistics.” Hence, Pakistan is left with no other option but to approach the fund for support.

However, the speakers were unanimous in their opinion that the Pakistan Muslim League-Nawaz (PML-N) government would not go for any option that might dent their already struggling political goodwill.

“This is the election year, and governments refrain from unpopular decisions ahead of polls,” Arif Habib said, adding, “Going to IMF means devaluation of local currency, surging inflation and unrest among masses.”

The World Bank has reported that the country is facing headwinds in the external sector and rising deficit could put macro-economic management at risk. Accordingly, Pakistan needs around $17 billion to cover rising current account deficit and debt payments. The current account deficit surged 102 percent to $2.601 billion in the first two months of the current fiscal year (July-August 2017), the State Bank of Pakistan (SBP) reported as higher imports growth offset the marginal improvement in exports.

The speakers at the forum were optimistic of Pakistan’s growth outlook, and underlined the importance of consistent fiscal policies, improvement in tax-to-GDP ratio and documentation of the economy. Wajahat stressed upon reduced reliance on indirect taxes and elimination of the SRO culture, which had created a discriminatory environment among industrialists and traders.

Arif Habib kept his focus on wooing non-resident Pakistanis to bring their money into the country either through providing investment opportunities or announcing amnesty scheme to encourage declaration of offshore assets. “This could alone generate $5-6 billion to support the country’s ballooning current account deficit,” he said.