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October 14, 2018

No accord with IMF in case of tough terms: Asad

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October 14, 2018

ISLAMABAD: The Finance Minister, Asad Umar has said the government would not sign an agreement with the IMF if it proffered some tough and unbearable conditions for the loan.

Umar was addressing a press conference here at the Q Block (Ministry of Finance) on Saturday. He said in the past Pakistan signed loan agreements with the IMF on 18 times but this time a storm in the tea cup is being created from every nook and corner of the country.

It seems if the PTI government has carried out any outlandish job. He said in the current financial circumstances, the bailout package from IMF is very essential because the level of foreign reserves have plunged to Rs8.40 billion, the trade deficit has swelled due to price hike of natural gas and electricity, imports have enhanced due to the ban imposed on Iran and above all the fiscal deficit is running at $2 billion per month.

Finance Minister Asad Umar said the decision to opt for going to IMF even by the previous government was correct as Ishaq Dar had no choice.

Rejecting the US narrative about Pakistan’s request for fresh bailout package from the IMF mainly because of CPEC repayments, Asad Umar said Pakistan would disclose all the details of the debt to the IMF under debt sustainability indicators including $900 million repayment of loans to China over the next three years. The minister also said Pakistan would not accept IMF’s conditions on matters of national security as apprehensions have been expressed by many and no country could compromise on such issues. “There is nothing to hide about repayment of loans to China and the US narrative is 100 percent wrong because the facts don’t support it. Out of the total debt, repayment is estimated at $9 billion for the current fiscal year and the repayment of $300 million per annum to China will kick-start from the next year for a period of next three years,” Finance Minister Asad Umar said.

The minister claimed that neither he nor Prime Minister Imran Khan ever talked about not approaching the IMF after coming into power, adding he has always talked about the requirement of getting a bailout package from friendly countries or from the IMF. Flanked by Adviser to PM on Revenue, Hammad Azhar on this occasion, Asad Umar said Pakistan is still negotiating oil on deferred payment with Saudi Arabia. To another query regarding stopgap arrangement to avert eruption of balance of payment crisis until the IMF loan is approved, the minister said they are working on it by requesting friends to get assistance and he is going to brief the prime minister soon.

Regarding the US onslaught against the CPEC, he said he has explained the details of the loans related to CPEC repayments to the US Under Secretary of Treasury and the MD IMF. Asad said he told them that the repayment of loans under the debt sustainability indicators has nothing to do with the CPEC.

The minister said the US possessed weightage of 16.4 percent in the IMF’s Executive Board but it did not enjoy veto power as the Fund took decision with 51 percent weightage on the basis of majority. He conceded that Washington enjoyed influence but Pakistan is also a shareholder of the IMF and Pakistan is hopeful that IMF will take decision in accordance with its charter. He said Pakistan would seek a three-year IMF programme and the mission would visit Islamabad from November 7 to work out details of the next Fund programme. He said Pakistan’s financing gap stood at $12 billion and one component of it would be provided by the IMF while the remaining portion of this financing gap would be filled through avenues including the WB, ADB and others. He said China did not have any problem about the transparency of CPEC loans as they are actively working against corruption and even executed a minister involved in such crimes. He said he is also pleased that the IMF is also talking against corruption.

Umar said the recent devaluation of rupee against dollar is a ‘deliberate move’ by the State Bank of Pakistan (SBP) and there is no need of approval from him or the Ministry of Finance. To another query regarding cost of IMF programme for the poor masses, the minister said Pakistan had to devalue its currency by 26 percent and hike the discount rates by 2.75 percent in the last one year when the country was not under the IMF programme because there is a cost attached to wrong decision making on the economic front. If Pakistan decides against going to the IMF, there will be more requirements of adjustments that will further burden the masses, he added.

He said if Pakistan’s economy did not improve after five years at the completion of our tenure, the PTI would be responsible for this mess, adding that as the last PML N-led government is responsible for the difficulties being faced by the people and the government today.

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