Pakistan cannot take harsh decisions on IMF instructions, says Ishaq Dar

ISLAMABAD: Finance Minister Ishaq Dar said on Thursday that Pakistan cannot take harsh decisions on the instruction of the International Monetary Fund (IMF).

Talking to a media person after speaking at 3rd Islamabad Security Dialogue, the Finance Minister said that the country is required to make a payment of $3.7 billion in May and June 2023 which would be done in time.

He said that payments will be arranged before the due date and financing commitments made by friendly countries would materialize soon.

Ishaq Dar said that he does not want to talk about the default.  “A global rating agency has also commented on the possible default of Pakistan but the country with or without IMF would not default”, he vowed.

The Finance Minister said that there are $10 billion foreign exchange reserves in the county.

He said that technical negotiations with the IMF were concluded on February 9, 2023 but there was a gap with regard to the external account.

He said that some friendly countries have promised financing for Pakistan and the Fund is looking forward to their implementation.

Dar refused to comment about his predecessor Miftah Ismail’s statements. He said that Pakistan has fulfilled all conditions of the IMF and taken measures for the agreement in accordance with the terms of the IMF. He said that the IMF wants more time for staff level agreement.

Finance Minister Ishaq Dar said that State is more important than politics and the government is aware of the problems faced by the society.

He added that the government has taken difficult decisions at political cost, Dar said that Pakistan wants to take CPEC forward and regretted that Special Economic Zones are pending for five years. He wanted Chinese industry to be relocated in Pakistan.

He said that FBR’s tax revenue increased by 18%, current account deficit was surplus in March 2023 and is also expected to surplus in April as well.

The government has introduced reforms to remove structural imbalances adding that he said that the priority of the government is to increase exports as it would help reduce trade deficit.

He also recounted that BISP stipend has been increased for beneficiaries and the Prime Minister announced austerity measures to reduce expenses.

He also said that the PDM government will present the budget on June 9, 2023 and we will announce relief measures in this budget.

Meanwhile, Julie Kozack, IMF spokeswoman said in a scheduled press conference on Thursday that Pakistan needs significant additional financing for a successful completion of the long-stalled ninth review of the International Monetary Fund’s bailout package.

Obtaining commitments of significant additional financing is essential before the IMF approves the release of pending bailout funds that are crucial for Pakistan to resolve an acute balance of payments crisis.

Julie Kozack said that financing already committed by Pakistan’s external partners was welcomed.

The United Arab Emirates, Saudi Arabia and China came to Pakistan’s assistance in March and April with pledges that would cover some of the funding deficit.

“Our team is very heavily engaged of course with the Pakistani authorities, because Pakistan indeed faces a very challenging situation,” said Kozack.

She added that the large South Asian economy was facing stagflation and had also been battered by a series of shocks including severe floods.

Bloomberg on Thursday quoting IMF reported that Pakistan has committed not to implement a cross-subsidy programme. The government also will not introduce new tax exemptions and will “durably allow” a market-based exchange rate for the rupee currency.