WASHINGTON: Adviser to Prime Minister on Finance and Economic Affairs Miftah Ismail will arrive in Washington on Wednesday to attend spring meetings of the International Monetary Fund and World Bank Group but is also likely to hold bilateral meeting with American officials.
The visit comes a few days before the last federal budget of the PML-N government to be unveiled on April 27 and is causing speculation in Pakistan that he may seek some last-minute reprieve from international donors and the US government.
But Ismail has already said that the government is not seeking another package from the International Monetary Fund (IMF), which begins its spring meetings in Washington from April 18.
In 2013, the IMF provided a $6.6 billion loan package to Pakistan to help deal with “slow growth, declining reserves and increasing fiscal deficit.” Pakistan successfully completed the 36-month package and earned IMF’s praise for displaying fiscal discipline during this period.
Visit is for Spring Meetings of the IMF and World Bank, but includes bilateral discussions with US officials
Analysts predict that deteriorating external finances and dwindling foreign reserves may force the country to seek another bailout package from the IMF. But they also point out that the situation has changed drastically since 2013.
Pakistan is no longer considered a close ally by the US and the Trump administration has already suspended its security assistance to the country. There are indications that Washington may further reduce its economic support by July this year.
During his three-day stay in Washington, Miftah will also meet senior US officials in an effort to improve economic ties with the world’s largest economy, but those meetings present starker challenges today they would have a few years ago.
Miftah will also seek Washington’s backing for his efforts to prevent Pakistan from being placed on the grey list of the Financial Action Task Force (FATF), which has already put Islamabad on a watch list of the countries whose financial systems have strategic deficiencies in combating money laundering and terror financing.
Days before his scheduled visit to US, Miftah told journalists in Islamabad that Pakistan will have an action plan ready by June this year to allay FATF’s concerns. He said the plan would be formulated and executed within three months and hoped that by “implementing it, Pakistan will be off the grey list within a year.”
Getting off that list without US support, however, could take a little more than an action plan . Pakistan is due to be added to the FATF grey list in June.
Concerns about critically low foreign exchange reserves — caused by a widening current account deficit — are also to likely figure prominently in Miftah’s discussions in Washington. .
In a report released in mid-March, IMF projected Pakistan’s gross financing requirements at $24.5bn for fiscal year 2017-18 and $27bn for 2018-19. A World Bank report, published on Sunday, warned that macroeconomic stability in the country was a major concern for the near-term economic outlook. It noted that the balance of payments position was particularly vulnerable and the upcoming elections may make things worse by delaying policy adjustments.
The external vulnerabilities as well as the countries growing isolation in important global bodies will cast an important shadow as Miftah moves to probe the mood in Washington, particularly inside the IMF and the US Treasury.
Pakistan has also approached friendly nations — particularly China and Saudi Arabia — for assistance to help avert another approach to the IMF. But so far, their response has not been very encouraging.
Before his departure, he addressed a pre-budget seminar at the Sustainable Development Policy Institute in Islamabad where he said that privatisation should top the agenda of all political parties in the upcoming elections.
He said Pakistan needs to grow at 8pc per year to meaningfully reduce poverty. He also pointed to the upcoming tax amnesty scheme, saying the government is giving “tax evaders a chance to declare their undeclared wealth”. We are enabling a system in which only those can buy properties or plots who are tax filers, otherwise, one cannot buy any piece of land, he added.
Published in Dawn, April 17th, 2018
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