FATF and IMF conditions: Pakistan may seek US intervention for relief

ISLAMABAD: Pakistan may seek US intervention for relief from the FATF and IMF’s tough conditions, as both would be reviewing its position in the light of conditions set out by them.

The final meeting of the FATF will be held in October in Paris which will decide whether to keep Pakistan in the grey list or place it out, a federal cabinet member told The News.

“The FATF is going to meet in Paris somewhere in next month of October where it will decide Pakistan’s fate. The same month, the IMF will also initiate review of first quarter of Pakistan’s output under $6 billion program loan,” he said.

One of the economic ministers confided to this reporter that Pakistan subscribed the toughest ever IMF loan program without negotiations and now the economic managers had started feeling the heat of tough conditions. The IMF had told Pakistan’s new economic team after the ouster of ex-finance minister Asad Umar in plain words: ‘’Take the program loan with toughest conditions or leave it.’’

The government is facing a huge revenue shortfall and it will be left with no option but to come up with a mini-budget with more taxation on the direction of the IMF. The government does not want to impose more taxes [on the masses] and this could only be done if the US plays its role in getting relief from the IMF.

“Pakistan wants relaxation in the position of FATF and IMF against its services for peaceful exit of US troops from Afghanistan,” the minister said. Though President Trump has cancelled talks with the Taliban on account of attack on Kabul which took many lives including one US troop’s life, the US administration still hopes that Pakistan is in a position to influence the Taliban for peaceful exist of US troops from Afghanistan.

Prime Minister Imran Khan along with his entourage on way to the US will first arrive in Saudi Arabia and then reach directly in New York. In the US, Prime Minister will twice meet the US president. Economic managers including Adviser to PM on Finance and Revenue Dr Hafeez Shaikh will also accompany Prime Minister Imran Khan. Adviser PM on Commerce, Textile, Industry & Production and Investment Razzaq Dawood will leave the country on September 19 and will arrive directly in Washington DC where he will join the prime minister’s entourage.

The prime minister will remain in the US till September 28. It is pertinent to mention that Pakistan has already deposited with Asia Pacific’s Joint Group in Bangkok its compliance report on 27-point action plan last month, and more importantly Pakistan responded to all queries raised by the AP Joint Group. Now the AP Joint Group will present its report on Pakistan in meeting of FATF in October.

According to a top official privy to the development on front of FATF, Pakistan is left with no option but to launch a diplomatic offensive to win support of Saudi Arabia, China, Turkey and Malaysia ensuring FATF’s decision in its favour.

While initiating diplomatic efforts, Pakistan should also keep India out that wants to place Pakistan in the black list. Under this scenario, the importance of US has increased and Pakistan will during prime minister’s visit to US will persuade Trump administration for relief from the FATF and IMF.

Coming to the scenario of massive slowdown in economic activities in the wake of toughest IMF program, the government has witnessed a huge surge of 8.9 percent in the budget deficit in the last fiscal year ended on June 30, 2019.

Inflation has entered double digit and because of high interest rate, economic activities have almost come to a standstill. Unemployment is on the rise. Under this scenario, Pakistan wants the US help to dilute IMF conditions, as the US has 15 per cent voting rights in the IMF board.

If the US takes the decision in favour of Pakistan, then the EU and Japan will follow it. In toto, the US, the EU and Japan have 51 percent voting rights in the IMF board.