ISLAMABAD: On Wednesday, the United States inquired with Pakistan about its backup plan in case the International Monetary Fund (IMF) program concludes next week without providing the third-to-last loan installment of $1.2 billion.
During a meeting between Finance Minister Ishaq Dar and United States Ambassador Donald Blome, held in the Q Block, this question was raised. Pakistani authorities are now seeking a “plan B” as a precautionary blueprint in case the four-year IMF program faces a similar fate as the previous 21 failed programs.
Blome’s inquiry came after Dar briefed the top US diplomat in Islamabad about the government’s efforts over the past few months to revive the $6.5 billion bailout package. The meeting took place a day before Prime Minister Shehbaz Sharif’s scheduled meeting with the IMF Managing Director, Kristalina Georgieva, on the sidelines of the Paris Climate Finance Summit. PM Sharif departed for Paris on Wednesday for a two-day visit.
Despite the premier’s attempts to seek the managing director’s intervention, including interactions with ambassadors from Western, European, and Asian countries, the desired results have not been achieved. PM Sharif has had telephonic conversations with Kristalina in the past month and has written three letters to her, highlighting Pakistan’s efforts to revive the stalled program.
Although Dar did not provide many details about the fallback option, he mentioned that the country was managing without the IMF. According to insiders, Pakistan’s backup plan involves advancing government-to-government transactions to raise funds, such as handing over four port berths to the United Arab Emirates (UAE). Additionally, the government is relying on a proposed $100,000 foreign remittance amnesty without any questions asked, which is part of the upcoming fiscal year’s budget. If the expected breakthrough is not achieved during the PM-MD meeting in Paris, the government can implement this new amnesty from June 25th.
If successful, the military’s Special Investment Facilitation Council (SIFC) could attract funds from Gulf countries for corporate farming projects they are interested in. However, this plan is still in its early stages, despite the interest expressed by these countries in joint ventures several months ago.
According to the finance ministry, the finance minister updated the US envoy about the ongoing talks with the IMF and assured that the government is committed to completing the program. Dar also mentioned that China provided significant assistance by refinancing $1.3 billion of foreign commercial loans ahead of schedule. However, despite the difficult measures Pakistan has taken since February, the finance minister expressed dissatisfaction with the IMF’s lack of cooperation.
During the meeting, Dar briefed Blome on the progress made in reducing the current account deficit, which remained below $3 billion in the first 11 months of the current fiscal year. May marked the third consecutive month of achieving a current account surplus, helping to maintain the official foreign exchange reserves at their current level. Dar also highlighted the fiscal consolidation measures introduced in the budget, which resulted in a primary budget surplus of Rs379 billion.
Furthermore, Dar shared the government’s budgetary measures to reduce the fiscal gap and fulfill national and international financial obligations. He discussed the government’s economic policies and priorities to address the challenging economic environment and stabilize and grow the economy.
The day before, Andrew Mitchell, Britain’s Minister of State in the Foreign, Commonwealth & Development Office (FCDO), held a virtual meeting with Dar and advised him to bridge the trust deficit with the IMF.
According to an official statement from the finance ministry, Dar emphasized Pakistan’s deep-rooted and durable bilateral relations with the US on economic and trade fronts during the meeting with the US ambassador.
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