WASHINGTON: Pakistan has a debt problem and a severe external debt problem but Pakistan does not have a China debt problem, said Finance Minister Asad Umar while announcing that Pakistan has principally agreed to sign a bailout package with the IMF.
Speaking to a small group of Pakistani-Americans at the embassy, the finance minister said that his talks with the international lenders went smoothly during his three-day visit here and a staff mission of the International Monetary Fund (IMF) will visit Islamabad later this month to finalise technical details of the financial programme.
He did not disclose the size of the proposed package but stressed that earlier financial programmes were run only to stabilise the economy rather than enduring basic structural changes. “Past governments did not own up to those structural changes as promised to the IMF; but we propagated those reforms and have already started fundamental changes without the IMF asking for it,” he said adding the steps were taken to deal with the huge balance of payment crisis and such structural changes would continue afterwards as well.
The finance minister further said that Pakistan made certain changes in the economy before approaching the IMF and for that very reason current account deficit was less than seventy percent from the last year. He said that Pakistan had arranged short term financing to meet these challenges, so now the IMF programme will steer the economy on the right path.
Answering a question Asad Umar said that China specific debt was more a construct of the Western media than the reality. “The reality is far more benign that what is portrayed in the media here,” the minister said adding that the total size of the CPEC projects under execution right now were $27 billion; out of which $4billion includes equity and some domestic debt. “The total debt which is related to CPEC is about $20 billion or less than that,” he explained in his words saying that the debt that Pakistan owes to China is just about ten percent of the country’s total public debt.”
Discussing the reasons, he said it was primarily due to the fact that “we would allow the competitiveness of the economy to erode, our exports as a proportion of our economy was always low and nearly halved over the last 15 years; so we have a situation where we are simply not producing enough goods and services of quality and enterprise with the rest of the world.”
Dispelling the rumors that he was leaving the finance ministry, he said he was asked by the prime minister to help Pakistan and thus he would continue to contribute for the betterment of the country. He also said that FATF has to make a decision by September, but almost everybody admits that Pakistan has made significant improvement in its system and increased its compliance. “There’s also general acknowledgment that Pakistan has taken a very clear stance in terms of the proscribed organisations and there are very structural, methodical actions taking place with the decisions at the highest level,” he said.
He said that the PTI government has divided its five-year term into three phases. “The first few months was survival, now we are in the stabilisation mode that could last for two years and the growth would start from year three.” Asad Umar said that trade between the neighbours would help the people of the region. He said Pakistan has established a strategic framework with Turkey, and an agreement with Turkamistan for the gas pipeline has been signed. He added that New Delhi was not forthcoming to the ideas that prime minister had proposed, but hoped that once the elections in India are over and a new government is in place, the bilateral talks on all pending issues could resume.
