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February 11, 2019

Pakistan, IMF agree on economic reforms

Top Story

February 11, 2019

ISLAMABAD/DUBAI: After getting assurances from Prime Minister Imran Khan for undertaking structural reforms, the IMF’s Managing Director Christine Lagarde reiterated the Fund’s readiness to support Pakistan, however, the details of the Fund sponsored programme would be worked out through staff level agreement between Pakistan and the IMF teams in coming months.

This high-level meeting has been able to break impasse-like situation as ice has started melting, but both the IMF and the Finance Ministry officials are tight-lipped before finalising schedule for the next IMF mission. The next IMF mission will only be announced when both sides will be confident for achieving breakthrough for evolving consensus for any agreement because any inconclusive talks will have more disastrous impact for the country’s economy.

A senior official of Pakistani team told The News on Sunday that the IMF mission was expected to visit Pakistan probably next month following high-level interaction between the IMF’s MD and Prime Minister Imran Khan held in Dubai on the sidelines of one World Government Summit hosted by Dubai government.

It is the first time when the prime minister has given assurances to the IMF that Islamabad will undertake structural reforms to fix the economic difficulties and patchwork approach will not be adopted.

“Probably the IMF team will plan its visit to Islamabad next month for renewed efforts to strike staff-level agreement on next bailout package,” said the top official, and added that if everything goes well then the IMF programme can be tabled before the Fund’s executive board in May.

In case of staff-level agreement, the IMF might ask Pakistan to undertake some steps in next budget 2019-20 and then the executive board would grant approval so in such a scenario the IMF programme could be approved in June or July 2019.

Christine Lagarde in her statement said a strong economic package was needed to good governance and improving life standard of the poor.

“I had a good and constructive meeting with Prime Minister Khan, during which we discussed recent economic developments and prospects for Pakistan in the context of ongoing discussions towards an IMF-supported programme.”

She added, “I reiterated that the IMF stands ready to support Pakistan. I also highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth. As emphasised in the new government’s policy agenda, protecting the poor and strengthening governance are key priorities to improve people’s living standards in a sustainable manner.”

Pakistani side in separate statement said that Prime Minister Imran Khan had a meeting with Christine Lagarde.

The prime minister appreciated IMF’s support to Pakistan and shared his vision for nation-building. He reiterated the government’s commitment for undertaking structural and governance reforms and strengthening social protection in the country.

The IMF managing director acknowledged the steps taken so far by the Pakistan government for stabilising the economy. She said the IMF will remain engaged in supporting Pakistan in sustaining its economic recovery.

The two sides agreed to work together on policy priorities and reforms aimed at reducing imbalances and laying the foundations of a job creating growth path in Pakistan. In this regard, deliberations between Pakistani authorities and IMF staff will continue to finalise an agreement on the contours of a programme.

Meanwhile, Prime Minister Imran Khan, while apprising the international gathering at 7th edition of the World Government Summit about his government’s reforms agenda, told the world investors that it was high time they should invest in Pakistan amid relaxed visa regime and openness for ease of doing business.

“This is the time -- my last word to the investors -- this is the time to come to Pakistan when it is just going on the upswing. This is the time to invest in the country and don’t miss the boat,” the prime minister remarked in his keynote address at the Summit.

Themed "Shaping the future of governments”, the summit attracted the global policymakers from government and private sectors. In total, more than 4,000 decision-makers from 140 countries, including heads of state, ministers and business leaders, gathered at the international event to help shape the future of the planet.

The prime minister arrived here earlier in the day along with a high level delegation, including Foreign Minister Shah Mahmood Qureshi, Finance Minister Asad Umar, Minister for Information Fawad Chaudhry, Minister for Maritime Affairs Syed Ali Haider Zaidi, Adviser to PM on Commerce Abdul Razak Dawood and Adviser on Institutional Reforms Dr Ishrat Hussain.

The prime minister's day-along visit comes at the invitation of Vice President and Prime Minister of the United Arab Emirates, and Ruler of Dubai Sheikh Mohammed Bin Rashid Al Maktoum.

Imran Khan said that during his international cricketing career, he had seen lot of players with immense talent but they never made it big for being scared of loss and did not take risks. “Eventually, the ones, who took both chances and risks, were the ones who made it big,” he added.

Highlighting his government’s measures to tackle fiscal deficit by increasing the exports and attracting the investment, the prime minister said it was the time Pakistan would take off. He said the government had opened up the market to investors and allowed them to make money that would ultimately bring the people out of poverty.

He said the government was bringing serious reforms to bring ease of doing business, besides introducing tax reforms.

Citing the immense tourism potential in Pakistan, the prime minister said his country was home to one of the best mountains, half of the world’s highest peaks, 1,000 kilometres long coast line, the oldest civilisations and the oldest living cities. Besides, Pakistan also had huge potential of religious tourism as it was home to the worship places of Hindus, Sikhs and Buddhism. "For Sufism, we have the highest number of Sufi shrines," he added.

The prime minister said Pakistan had opened up it visa regime and announced visa on arrival facility for 70 countries. The prime minister told the audience that three factors, including the cricket, experiences during the treatment of his cancer-patient mother, and witnessing the journey of development by other states compelled him to come into politics.

It is Imran Khan’s third visit to the Emirates since he took the premier’s office. In his address, Imran Khan also explained the corrupt practices of the homeland, “People did not trust governments in the past which is why they didn’t pay taxes.” He elaborated the audience about Pakistan’s economic situation, "When we got into power we had a massive fiscal deficit and current account deficit so we unfortunately had to raise bills.” But now, he said, the prime minister claimed that the country's fiscal deficit was reducing and showing downward trend.

He said in 1960s, Pakistan was the fastest growing nation in Asia with excellent governance system and bureaucracy. But unfortunately, he said, it could not keep up the pace as meritocracy lost the space to corruption. He said during his campaign for building the cancer hospital, even the poorest of the poor had supported him through charity but the same people did not pay taxes just because of lacking trust in the previous governments owing to the lavish lifestyle of elite and high level of corruption.

Imran Khan said he had witnessed the development journey of the UAE and China, and found good governance and accountability as the commonalities in both the cases.

Imran Khan said Pakistan could not bring up the cricketing talent as it lacked meritocracy and head-hunting mechanism like Australia. He applauded the Chinese achievement of steering around 700 million people out of poverty through prudent and humane policies.

He shared with the audience his desire to develop Pakistan on the pattern of State of Madina, which had laid the foundation of the greatest civilisation in the history of mankind, based on the principles of justice and humanity.

He said in that model (Madina State), the state took responsibility for the poor, orphans and widows. The Holy Prophet (Peace Be Upon Him) made seeking knowledge a sacred duty and gave protection to the non-Muslims. His last sermon was a charter for human rights, he added.

The prime minister said that in Pakistan he wanted the similar system where there must be a rule of law and the government must be accountable. He said starting his political career in 1996, his party could form government in the terror-hit province of Khyber Pakhtunkhwa in 2013. It reformed police and bureaucracy, reduced the poverty to half and spent money on climate change, and as a result it was given the two-third majority by the people in the 2018 general elections. He said his government had launched his reform agenda and was trying to change the economic policies, cut fiscal deficit and enhance exports.

Imran Khan censured the bureaucratic mindset in the past for disallowing the investors to make money as a socialist mindset pervaded the country. He said now the government was allowing the investors to make money because it would ultimately reduce the poverty level in the country.