Monday December 11, 2023

General Qamar Javed Bajwa seeks US help for speedy IMF bailout

General Bajwa has asked the US to push the IMF for an early disbursement of $1.2 billion as Pakistan faces the risk of debt default due to dwindling foreign reserves

General Qamar Javed Bajwa seeks US help for speedy IMF bailout

ISLAMABAD/WASHINGTON: Chief of the Army Staff (COAS) General Qamar Javed Bajwa has asked the US to push the International Monetary Fund (IMF) for an early disbursement of $1.2 billion as Pakistan faces the risk of debt default due to dwindling foreign reserves, reports Nikkei Asia.

Gen Bajwa called US Deputy Secretary of State Wendy Sherman earlier in the week, sources from both US and Pakistan confided to the publication.

Gen Bajwa requested the White House and Treasury Department to urge

the lender to expedite the bailout process and immediately release the nearly $1.2 billion that Pakistan expects to receive under a resumed loan programme, the sources confirmed to Nikkei.

Meanwhile, the Foreign Office Friday confirmed Army Chief General Qamar Javed Bajwa had called US Deputy Secretary of State Wendy Sherman over phone earlier in the week.

“Well, I understand a conversation has taken place, but at this stage, I am not in direct knowledge of the content of this discussion,” said the Foreign Office spokesman during the weekly media briefing here.

The Nikkei Asia news report caught everyone by surprise, as it’s very rare for the army chief to directly contact the White House. However, it clearly indicates that Shehbaz Sharif government has failed to get the IMF loan in a timely manner, and the economy facing a great stress is showing no signs of improving.

The prime minister recently sent his SAPM Tariq Fatemi to the White House where he met with Deputy Secretary of State Wendy Sherman.

Reports suggested that among other topics that were discussed, the IMF loan and a request to the White House to use its good offices were also raised.

The Foreign Office claimed that this was a private visit by Fatemi.

Pakistan and the IMF have reached a staff-level agreement with reports indicating that the amount should reach Pakistan by the third week of August, helping Pakistan to avoid a default.

In a related development, the US State Department Friday said, “US officials talk to Pakistani officials regularly on a range of issues.”

The State Department was responding to questions about the COAS’ phone call to Deputy Secretary of State Wendy Sherman.

Without going into further details, the department said, “As standard practice, we don’t comment on the specifics of private diplomatic conversations.”

On Thursday, the State Department’s spokesperson Ned Price said that the US remains engaged with a range of stakeholders in Pakistan.

Commenting on the supposed contact of former prime minister Imran Khan’s close associate with Assistant Secretary of State, Donald Lu, a few weeks ago, the spokesperson said, “If there was any such meeting, I am just not in a position to speak on any such meeting.”

Responding to another question, the spokesperson said the US supports peaceful upholding of constitutional and democratic principles, including respect for human rights.

“We don’t support one political party over another. We support those broader principles of the rule of law and equal justice under the law.”

In another development, COAS General Qamar Javed Bajwa and General Michael Erik Kurilla, Commander United States Central Command (US CENTCOM), had a telephonic conversation on Friday.

During the call, matters of mutual interests, regional stability as well as defence and security cooperation were discussed in detail.

“Pakistan values its relations with US and we earnestly look forward to enhance mutually beneficial multi-domain relations based on common interests,” the COAS said.

Both reiterated the desire to further enhance bilateral relations in all fields, the Inter-Services Public Relations (ISPR) said in a statement.

The commander US CENTCOM acknowledged the professionalism of Pakistan Armed Forces. He appreciated Pakistan’s role in regional stability and pledged to play his role for further improvement in cooperation with Pakistan at all levels.

Amid an all-out effort by General Qamar Javed Bajwa, the IMF Board is expected to take up Pakistan’s request for revival of the stalled program on August 24 in its meeting at Washington, D.C.

The IMF has put prior action on Pakistan to jack up the petroleum development levy (PDL) by Rs10 per liter on petrol and Rs5 per liter on diesel with effect from August 1.

It has also been written that the PDL will be further increased in the coming months of the current fiscal year, including January 2023 and April 2023.

Minister for Finance Miftah Ismail and Governor State Bank of Pakistan will duly sign the Letter of Intent (LoI) next week and then dispatch Islamabad’s request before the IMF’s Executive Board for completion of 7th and 8th reviews and release of $1.17 billion tranche under augmented $7 billion Extended Fund Facility (EFF).

“The Minister for Finance will extend confirmation and guarantee to the IMF’s Board in writing through LoI that bilateral friends will fulfill financing needs for the current fiscal year. Then the respective country’s director in the Board’s meeting will reiterate their commitment that they will extend financial support to Pakistan,” said an official of the finance ministry.

A list of prior actions handed over by IMF to Pakistan reads out that the Fund staff demanded four conditions for presenting Pakistan’s case before the Fund’s Executive Board. There are some structural benchmarks (SBs) as well including committing not to grant further tax amnesties and no further tax exemptions.

The list included approval of the FY2023 budget including to reform Personal Income Tax in line with the IMF staff agreement to meet program targets, signature by the federal and provincial governments of memorandum of understanding (MoU) on provincial fiscal targets consistent with FY23 budget. The relief package reversal is part of prior actions and full elimination of fuel subsidies, raising PDL every month including January 2023 and April 2023.

The power tariff will be raised, including Rs3.50 per unit in annual rebasing (AR) and full subsidy reform mark-up Rs0.20 per kwh on July 25, 2022, second stage AR of Rs3.50 per unit from August 1, 2022 and third cabinet approval on implementation of third full stage AR on October 1, 2022 of Rs0.91 per kwh.

The official said that there had been nothing in writing from the IMF about the financing gap and placing it as prior actions.

When asked about COAS Qamar Javed Bajwa’s call to the US official for seeking help to convince the IMF for providing the bailout package, the official expressed his ignorance about it. However, another official said he might have called to extend assurance that bilateral friends would bridge the financing gap and the IMF’s Board should meet as early as possible to revive the stalled program.

The IMF’s Board is expected to meet on August 24, 2022 for considering approval on Pakistan’s request. Now the LoI will be forwarded maximum by next week as it requires circulation of at least 14 days for circulating documents among the Board members.

The rupee has been witnessing immense pressures against the US dollar mainly because of the blunder committed by the government for importing $6.2 billion worth of POL products in last two months of May and June 2022. Now the LCs are maturing and the inter-bank market is facing severe liquidity crunch of dollars. The official seemed confident that after the revival of the IMF program, the exchange rate would reverse and speculators would have to face burnt but so far, the government and SBP seemed helpless.

APP reports: Meanwhile, Chinese Ambassador Nong Rong Friday thanked Chief of Army Staff (COAS) General Qamar Javed Bajwa for the special measures taken to provide safe and secure environment for Chinese personnel employed on various projects in Pakistan and efforts towards regional stability.

The Chinese ambassador called on the COAS here at General Headquarters (GHQ).

During the meeting, matters of mutual interest, defence collaboration, progress on China Pakistan Economic Corridor (CPEC) and regional security were discussed in detail, an Inter Services Public Relations (ISPR) news release said.

The COAS said that Pakistan valued China’s role in global and regional affairs and looked forward to enhancing its strategic partnership. The COAS reiterated that Pakistan remained committed to cooperating with its international partners for peace and stability in the region.

The visiting dignitary assured to play his role for further improvement in diplomatic cooperation with Pakistan at all levels.