KARACHI: Finance Minister Asad Umar has said the country needs no dictation from the International Monetary Fund (IMF) because the Pakistan Tehreek-i-Insaf (PTI) government has already set the right direction for its economy.
In his interview to BBC’s Stephen Sackur for the well-known show Hardtalk, the minister said the PTI government did not wait for the IMF to impose conditions but went ahead and took the steps it deemed necessary to improve the economy “without any assistance”.
“In the very first 100 days, we have increased gas prices, we have increased electricity prices, we have put in a supplementary finance budget where we increased taxes. The policy rate has been increased by the central bank, the rupee has been devalued,” he said.
Elaborating on the government’s ongoing negotiations with the IMF, he maintained that the two sides largely agreed on what needed to be done. “We don’t need IMF to dictate us for us to do that, because we believe this is what’s necessary.
Minister says in its first 100 days, govt has increased gas and electricity prices, put in supplementary finance budget where taxes have been raised, policy rate has been jacked up by central bank and rupee has been devalued
“However, the path for reforms is different in the [eyes of] IMF... and what we think is right for us. There is no difference of opinion about what needs to be done between us [the government and the IMF].”
He added that the pace and sequence of reform measures were currently being discussed by the two sides.
The minister said the PTI government had set a clear direction in its first 100 days and the economy would improve soon. “Pakistan now has a very clear strategy, [unlike before] which was consumption-led imported capital finance that has repeatedly put the country into these economic issues,” he said, adding that until the country moved to domestic resource mobilisation and productivity-led, export-oriented economy, it would not be able to get rid of the “begging bowl syndrome”.
Responding to questions about Prime Minister Imran Khan’s “U-turn” regarding financial assistance from friendly countries and possibly the IMF, Mr Umar said the country needed financial assistance to overcome the current economic crisis. “We are not proud of the fact that we had to go and ask for assistance. So if he [Mr Khan] has to do it, he is ashamed of it; but that is what we have had to do,” he said.
“The real challenge, and the real issue here is, something that we will be judged on in the future, did we take the right decision in setting the economy on a path to the last IMF programme that the country will ever have to take?”
The finance minister also shed light on Pakistan’s relations with Saudi Arabia against the backdrop of the murder of Saudi journalist Jamal Khashoggi. Asked why the government sent top leaders to an investment forum in Riyadh and accepted financial assistance from Saudi Arabia at a time when the world was criticising the kingdom for the murder, Mr Umar said the two countries “enjoy a consistent bilateral relationship, irrespective of who is in power”.
He added that the two countries enjoyed a close military relationship, which was not influenced by events in Yemen and neither by the murder of the dissident journalist.
“Western countries should be ashamed for talking about democracy and freedom, and reaching into Saudi pockets for business deals worth billions of dollars,” he said, apparently referring to US President Donald Trump.
A good deal
Regarding instability in Balochistan, the interviewer asked Mr Umar if all the “compromises that Pakistan is making to get its hands on Chinese money” were worth it. The minister responded by saying the China-Pakistan Economic Corridor was a “good deal in which interests of both the investors and the country were being served”.
In response to a question about the US government’s concerns about payment of China’s debt from the IMF loans, the finance minister said: “We’ll worry about our China debt problem, the US should worry about its problem.” He added that the US had the largest debt in the world to China, amounting to $1.3 trillion, while Pakistan owed less than 10 per cent of its foreign debt to the Chinese.
“We have had 12 IMF programmes in 30 years; why such an interest suddenly in which source or country Pakistan owes to? Why were the same questions not asked when Pakistan owed [to] western banks.”
Talking about challenges related to health and education sectors, the minister said there was a pressing need to generate revenue. “Those are the very reforms that we have been working on despite the severe balance of payments crisis. The revenue generation aspect is absolutely central to be able to deal with the horrendous challenges that we are facing,” he said.
“We need the revenue authority to be fixed. We have separated tax policy from tax administration, which is central to the reform effort.”
Commenting on the state of media and about the right to freedom of expression in the country, Mr Umar said that being democrats, the government had a vested interest in free media. “The need for free media is paramount and PTI stands by that responsibility,” he said, adding that the media should function in a responsible manner.
Responding to a question about Aasia Bibi, who has not been able to leave the country despite a favourable ruling by the Supreme Court of Pakistan, the minister said: “The government believes in the supremacy of law. It was the court’s decision. Neither give credit to nor discredit the government in this regard.”
Published in Dawn, December 13th, 2018