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April 16, 2019

Deal done with IMF

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April 16, 2019

ISLAMABAD: Amid the IMF’s public announcement to send its mission to Islamabad before the end of ongoing month to sign the agreement, Minister for Finance Asad Umar claimed that Pakistan and the IMF staff have struck an agreement on five major policy issues and exchanged documents on exchange rate, fiscal deficit, fixing energy, public finance and public sector enterprises.

“We have exchanged documents after striking an agreement with the IMF on major policy issues. We will get the IMF loan in the range of $6 to $8 billion for three years period and then other multilateral creditors will also providing funding as the WB will lend $7.5 to $8 billion and ADB in the range of $6 billion over three years’ period. We also kick-started procedures to approach the international capital market for launching a bond after signing the IMF agreement,” Asad Umar said while talking to reporters after attending a meeting of the National Assembly’s Standing Committee on Finance here at the Parliament House on Monday.

Official sources confirmed that the IMF team would be visiting Pakistan by the last week of April and was expected to conclude parleys for striking staff-level agreement before kick-starting of Ramazan. The minister said the IMF did not raise any objection over the upcoming amnesty scheme that will be tabled before the cabinet today (Tuesday) for getting final approval. He said that the IMF did not ask for slashing down the defence budget.

Regarding the Financial Action Task Force (FATF), the minister said the FATF review team would visit Pakistan in the third week of May as the country took desired steps to improve its compliance and also moved ahead against proscribed outfits. He said Pakistan again raised the issue of Indian lobbying as co-chair of FATF during his meeting with the FATF president who assured Islamabad that their compliance would be gauged on technical grounds instead of political consideration. He said Pakistan was to dispatch its compliance report on the FATF action plan by Monday night

When asked whether Pakistan considers the FATF president neutral, the minister replied “no comments” but added in the same breath that keeping in view his chair requirement, he should ensure fair treatment. On the other hand, the Office of the Resident Representative of IMF in a statement said, “The Pakistani authorities and IMF staff held constructive discussions during the IMF/World Bank Spring Meetings in Washington DC towards an IMF-supported programme. At the request of the authorities, an IMF mission will be going to Pakistan before the end of April to continue the discussions.”

The minister said prices of some items will increase, however, the common man will not be affected. Earlier, Asad Umar ruled out the possibility of raising electricity tariff but added in the same breath that the overall losses of electricity and gas ballooned to Rs600 billion. The minister said that IMF raised the issue of Chinese loans in last Oct/Nov talks and then they were briefed fully, so all news reports about IMF’s demand and refusal of Islamabad were contrary to the realities on the ground.

When the minister was asked that how the government would convert primary balance from negative 3 percent of GDP to surplus, the minister replied that he would share simple mathematics with this correspondent anytime in near future. He said that the country could not afford primary deficit for an indefinite period. He said that he had proposed to take the provinces into confidence on fiscal federalism. He said that he was supportive of wealth tax but the immoveable property was falling into the domain of the provinces. When inquired about changing his ministerial portfolio, the minister replied with poetic verse meaning that there were thousands of wishes that remained unfulfilled.

During the proceedings of the NA Committee on Finance, Asad Umar said the foreign currency reserves had touched to the lowest ebb when they took over and were standing at just filling the needs of 15 days on front of current account deficit. The country, he said, had never seen such an acute balance of payment (BoP) crisis before in its whole history and the IMF used to throw data to prove its analysis. He said that Pakistan was no longer in critical phase but expressed his fears that the possibility of making efforts to come out from stabilisation phase in haste might cause re-surfacing of crisis again. Asad Umar said that they struck consensus with the IMF and the Fund mission would visit Islamabad by end of the ongoing month to finalise details and sign staff level agreement. After signing the IMF agreement, he said the WB and ADB funding would be resumed, which got suspended during the last six months of the previous PML-N regime owing to failure of inking an agreement with the IMF and falling foreign currency reserves.

Qaiser Sheikh of the PML-N said the government should have gone into the IMF programme within first 100 days. Ayesha Ghous Pasha said that the government shared strategy, but missed out targets which it wanted to achieve over the period of three years under the IMF programme. Nafeesa Shah of the PPP said the NA session postponed on the pretext of launching amnesty scheme through a presidential ordinance. She said that FATF was asking about placing regulations on gold.

While replying different questions, Asad Umar said that they did not share details of macroeconomic framework because negotiations were underway and such information could jeopardise the ongoing parleys with the IMF. He argued that he should not share any number or policy at this stage before this committee as it meant that he had taken a position so he would suggest to the committee to take the lead and come up with proposals and mandate of taking decisions would be left to the government.

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