ISLAMABAD: Finance Minister Asad Umar on Thursday provided a brief about the condition of the country’s economy to Prime Minister Imran Khan, as it seeks outlets of obtaining financing without approaching the International Monetary Fund (IMF).
No option has yet been decided by the federal government, however, if it decides to not seek an IMF bailout, Pakistan’s reliance on China, Saudi Arabia and Kuwait would increase considerably.
According to high-ranked government sources, if Pakistan doesn’t seek an IMF bailout, then the import of oil on deferred payments and rollover of maturing loans could be the preferred choices to cope with external sector challenges, reports Express Tribune.
Mr Umar provided an update on the state of the economy to the prime minister and the possible scenario of economic affairs in case no intercession is made to rectify macroeconomic imbalances.
The finance minister after the conclusion of the meeting said that PM Imran Khan was apprised about the possible options available to increase revenue, control expenditures and fund external financing needs, however, it was “still work in progress”.
As per the options in mind of Mr Umar include aggressive taxation measures, a deep cut in development budget and a ban on a supplementary budget to manage fiscal deficit challenges, said government sources.
If these measures are enforced, it would result in economic growth rate dipping below 5 percent, which will contribute to a slight rise in unemployment in the first year of the PTI government.
Furthermore, sources said discussions took place in which avoiding an IMF bailout to the max was deliberated and increasing reliance on Kuwait, China and Saudi Arabia were talked about.
The main reason attributed to trying avoiding the IMF was not to sacrifice freedom of making economic decisions.
And China’s worries over the IMF bailout can assist Pakistan in avoiding the lender, which is under US’s influence.
The Ministry of Finance will deliberate upon all these options in coming days and submit the finalized action plan before the end of September.
The main way of avoiding an IMF bailout would be to obtain oil on deferred payments from Saudi Arabia and Kuwait which would result in an annual relief of roughly $4 billion. This includes $2 billion from Saudi Arabia, sources said.