Finance Minister Asad Umar has said it is still in Pakistan's interest to enter into a programme with the International Monetary Fund (IMF) to stabilise its economy, despite the agreements for financial assistance with other countries.
Speaking on DawnNewsTV show News Wise on Wednesday, he said the financing arrangements made by the Pakistan Tehreek-i-Insaf (PTI) government have eliminated any foreseeable financing problems until June 30, 2019.
"But because it will take time to support and implement the basic reforms that we have to undertake, we think it is still a better option that an IMF programme is signed," Umar said while
He added, however, that such a programme will be entered into only if its conditions are in Pakistan's interest.
Answering a question regarding the talks currently being held with a visiting IMF mission, the minister acknowledged that it was "difficult" to negotiate with the lender but that the talks had only just begun.
"It will be a huge challenge if there is no headway in the negotiations in three or four days," he said.
The minister said he did not see any challenge regarding the direction he wants the IMF talks to proceed in, and that "the entire debate will be on the pace of [fiscal] adjustment".
Dismissing concerns that the government had delayed approaching the IMF for a bailout, Umar said he had called the lender 10 days after being appointed, and while keeping the options open, asked the IMF to send a mission to Pakistan to conduct analysis of the economy. While simultaneously carrying out bilateral discussions with other countries, the government had announced it was approaching the IMF days after it received the staff mission's report.
He said exploring both options simultaneously had meant that the government now has "room and time to negotiate" with the IMF.
Clarifying his earlier statement, Umar said he had stated that only the "immediate" economic crisis of the country was over, and that reforms have just been started to eliminate the actual crisis which forces Pakistan to seek bailout programmes repeatedly.
He said the country had accumulated a current account deficit of $19 billion last fiscal year and it faces payments worth $9bn for previously taken loans. However, the fiscal steps taken by the government and monetary policy actions announced by the State Bank have shrunk the current account deficit by $6bn.
"Where we stand today, the current account deficit may total $12-13bn this [fiscal] year, the minister predicted.
He said in order to mitigate the impact the measures to cut the fiscal deficit could have on the growth, the government wants to shift the economy's emphasis from "capital intensive" ventures such as highways and plants to "job-intensive" sectors such as tourism, small and medium enterprises, agriculture and housing.
Nevertheless, Umar said, the country's growth will inevitably fall in the first 1-2 years of reforms, and will start to rise when "we hopefully bring the system on a sustainable path".