IMF’s $452m third tranche: Ministry denies tough prior actions needed

ISLAMABAD: The Ministry of Finance has described as "misleading and factually incorrect" a news item published in a section of the press suggesting that tough prior actions [are] needed for IMF’s $452 million third tranche.

In an official statement issued here, the Ministry of Finance stated that it is completely normal for quarterly reviews to sometimes take a few days more than planned, which must never be viewed as something extraordinary; the second and third quarterly reviews will be presented before the IMF board separately as planned; no decision has been taken as to any prior actions; China is Pakistan’s iron brother and there is no apprehension whatsoever on the roll-over/refinancing of Chinese loans.

The article in question is equally ill-conceived in trying to portray that only a miracle can save the IMF programme.

The press statement issued by the IMF on Friday explains that: The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies and that all end-December performance criteria were met, and structural benchmarks have been completed.”

The Finance Division would like to make it very clear that the government’s reform programme supported by the IMF’s Extended Fund Facility is on track.

Mehtab Haider adds: The Ministry of Finance preferred to issue the clarification without contradicting contents of the story. It only threw light on the issue of Chinese loans rollover by stating that there was no apprehension whatsoever on the roll-over/refinancing of Chinese loans.

It is not factually correct because the IMF did raise this issue during the recently-held inconclusive talks because in case of one loan, the Chinese bank first asked the Government of Pakistan to deposit the due amount which was later on approved as rollover with time lag of one and half month period in last Oct/Nov period of 2019.

The Pakistani authorities explained before the IMF that it was a procedural issue because the Chinese bank could not rollover the loan without getting back the due amount. Now the IMF raised the issue what would happen in case of another rollover of Chinese bank loan expected to be matured by end May/June period 2020, so it could create problem if it could not be rolled over before the end of the fiscal year i.e. June 30, 2020. The second pending issue with the IMF is related to fiscal adjustments that might result into demand of mini budget because the IMF is also worried that despite slapping additional taxes of Rs730 billion, there is no required increase in revenue collection. Finally, another lingering issue is fixing the energy sector, including hiking tariff of gas and electricity. This scribe also mentioned the possibility of combining two reviews if Pak authorities could not implement prior actions.

The Ministry of Finance has assumed a reactive role instead of playing its role as proactive. Finally, this scribe stands by each and every word written in the story.