As Pakistan grapples with the complexities of procuring a bailout from the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif has indicated the country’s intent to secure a new financial rescue package. This disclosure to IMF’s Managing Director Kristalina Georgieva was made during a recent phone conversation, according to informed sources.
On Wednesday, State Minister for Finance and Revenue Dr. Aisha Ghaus Pasha took issue with IMF mission chief Nathan Porter’s commentary on Pakistan’s political climate, stating that he ought not to meddle in the country’s domestic political affairs.
Pakistan’s current $6.5 billion bailout plan is currently off-track, with attempts to restore it over the past seven months proving unsuccessful. This programme is due to expire on June 30. Amid these challenges, certain diplomatic circles and international financial entities believe that without a fresh IMF package, Pakistan could face default.
The Finance Ministry, emphasizing the need for a new plan, stated that it is crucial not only to repay the $25 billion debt in the next fiscal year but also to sustain and build upon reforms initiated under the current programme.
However, this move by the Prime Minister appears to contradict Finance Minister Ishaq Dar’s previous position advocating that Pakistan should cease its reliance on the IMF. Despite this, some economic team members view a new IMF programme as a current necessity.
The IMF managing director has urged Pakistan to fulfill outstanding conditions, especially regarding foreign loans and the cessation of administrative controls over exchange rates. Nathan Porter also echoed this sentiment, emphasizing the need for Pakistan to align its next fiscal year budget with the IMF framework and provide clear policy direction on the exchange rate.
Responding to queries after a parliamentary committee meeting, Dr. Pasha said, “First, we want to complete the current programme. Only then will we discuss how to move forward from that point.”
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With the government’s term ending on August 12, it remains to be seen whether the incumbent or an interim government will initiate any dialogue with the IMF for a new programme.
Dr. Pasha was firm in her criticism of the IMF’s perceived involvement in Pakistan’s domestic affairs, labeling Porter’s statement on the political issues as “extraordinary”. In her view, any statement on political matters by the IMF, a multilateral lender, is unconventional.
Despite these controversies, Dr. Pasha affirmed the government’s continuous engagement with the IMF at a technical level and reported progress in this area.
The Finance Ministry anticipates a 52% increase over this year’s approved budget, suggesting budget outlays of approximately Rs14.6 trillion for the next fiscal year, with a federal budget deficit of around Rs7.8 trillion.
Reiterating Pakistan’s commitment to the IMF, Dr. Pasha stated, “We have clearly communicated to the IMF that the continuous delay in the revival of the programme is not in the interest of Pakistan or the IMF. This uncertainty needs to end.”
