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June 13, 2018

Caretaker govt not to move IMF for bailout package: Shamshad

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June 13, 2018

ISLAMABAD: Conceding to add 10,000 megawatt electricity into national grid in last five years from 2013 to 2018 and making commitment to overcome loadshedding during their remaining tenure till holding of next general elections, two federal ministers of caretaker setup made it clear that they would not sign any agreement or seek fresh bailout package from the IMF.

“We will not even hold article IV consultations with the IMF because neither it was our mandate nor the IMF will agree to hold this detailed consultations with the caretakers. We will honor all of our repayment of foreign debt obligations for avoiding default. The public debt in percentage of GDP has gone up which is the cause of worrisome for the economic management,” Federal Minister for Finance Dr Shamshad Akhtar said along with Minister for Information Ali Zafar while addressing a maiden press briefing here at PID on Tuesday afternoon.

It was quite strange that few days back, Ministry of Finance in its official statement had admitted that the Article IV consultation with the IMF was due in March and the government decided to present the Annual Budget 2018-19 in May 2018; the pre-occupation of key government ministries and officials in budget making exercise delayed the process. “The Article IV consultations are now likely to take place in the later part of June 2018. These are routine consultations and do not imply entering into negotiations with IMF” the Finance Ministry had stated.

Now the caretaker minister for Finance has taken U turn on it and categorically stated when insisted upon that they were not intended to hold Article IV consultations because it required detailed framework and placing of monitoring mechanism. If this negotiation starts then future framework will come under discussions and speculation will rife for entering into fresh agreement with the IMF, she said and added that neither it was mandate of caretaker nor the IMF would agree to hold such consultation with interim setup.

The minister said that the government hiked 50 percent petroleum prices than the requirement because if the prices had not increased they were going to face hit of Rs9 billion and keeping in view the budgetary constraints it was not possible to absorb this burden. The budget deficit, he said, was envisaged at 4.1 percent of GDP might go up to 6.1 percent of GDP keeping in view the gap in total revenues and expenditures. She said that they would not intend to bring any changes in definition of budget deficit so the outstanding amount of circular debt would remain outside the loop of the budget.

The minister said that Pakistan’s economy performed well on account of achieving broad-based real growth that touched 5.8 percent of GDP and directed to Pakistan Bureau of Statistics (PBS) to finalise these figures after end of this ongoing fiscal year. About inflation, she said that although average inflation remained manageable but the core inflation was picking up because ofsurge in POL prices and fluctuation in exchange rate. Regarding downslide in exchange rate, the minister said that the stable exchange rate required ability to intervene on consistent basis and keeping in view the reserve position it was not sustainable. Now the market driven policy will determine exchange rate position and different options are under consideration to improve inflows, she added.

The minister conceded that Pakistan’s economy was facing challenges of loans and twin deficits including the current account deficit (CAD) and budget deficit whereby the CAD had already gone up to $14 billion in just ten months (July-Apr) period against envisaged target of $8.9 billion for whole fiscal year 2017-18. The exports, she said, stood at $20 billion and imports fetched $45.5 billion so the trade gap stood at $24.5 billion which required to be financed.

To a query regarding repayment obligations, Dr Shamshad Akhtar said that they would not opt irresponsible path and would ensure repayment of foreign obligations. Federal Minister for Information Ali Zafar who also holds charge of Ministry of Energy (Power Division) said that it was their obligation to implement Article 19A on account of freedom of information by sharing true picture and reality with the masses. He said that it was mandate of the caretaker to assist the ECP for holding free and fair elections and there should be no doubt in anyone’s mind.

Dwelling upon on reasons behind recent surge in loadshedding, he said that the available power went up from 18753MW on 30-6-2013 to 28,704MW on 30-5-2018 by adding 10,000 into national grid in last five years. Without plunging into blame game, the minister said that the loadshedding increased with effect from May 28, 2018 because the hydle generation decreased to 3000MW from 6000MW last year, closing down of 1300MW Port Qasim because of technical fault and 1000MW of Baloki plant but now the water availability improved and all technical faults rectified so the availability of electricity would improve in days and weeks ahead. He said that the availability of power stood at 21000 to 22,000MW against demand of 2300 to 24000MW so there was gap of 2000MW.

He said that they would also take decisions on day to day affairs but would also devise future guidelines given to the elected government coming into power after winning July 25, 2018 elections.  

When asked about transfer/postings of bureaucracy, the minister said that if any bureaucrat was found in impartial activity then they would approach the ECP to inform that the services of such person would not be required. He also asked the media to highlight such elements in bureaucracy who found involved in supporting any political party or candidate.

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