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No panic over IMF bailout package: Asad
ISLAMABAD: Finance Minister Asad Umar on Thursday said there was no panic in Pakistan over a bailout package from the International Monetary Fund (IMF) and the country would neither go down on its knees and surrender before anybody nor would it take dictation for economic support.
“I understand where this question is coming from. They are worried why we are not going down on our knees; we will not go down on our knees and there is no need to go down on our knees,” the minister shot back when a questioner said the feeling among the Washington-based multilateral lenders was that Islamabad was taking expensive loans from alternative avenues instead of cheaper support from the IMF, World Bank and International Finance Corporation (IFC) at almost zero markup.
Mr Umar was speaking at a post-budget news conference along with Adviser to the Prime Minister on Commerce and Industries Abdul Razak Dawood, Minister of State for Revenue Hammad Azhar and Federal Board of Revenue chairman Dr Jehanzeb Khan.
“I have worked with the IFC and no one would be a bigger fool if he thinks they provide loans at no cost,” the finance minister said, adding that the financial support provided by Saudi Arabia, the United Arab Emirates and China was not even half of 8-9 per cent. He said Saudi Arabia had provided the deposit at about 3pc return and almost the same rate was on the UAE loan. Mr Umar went on to vent his displeasure over the question. “This is not that country, it’s a country of 210 million people who are of independent nature, who are honourable and take independent decisions. We are not taking dictation. There is no need to take dictation and we will not take anyone’s dictation.”
But he hastened to add that he was in continuous contact with the IMF and would hold another video conference on Friday with the Fund mission. He said the gap between the position of the IMF and the government had reduced and Pakistan would take a Fund programme when it was conducive to the people of Pakistan and there was no panic on that front as international swap rates were also getting better.
Meanwhile, the IMF resident representative in Islamabad, Teresa Daban Sanchez, had other ideas. “We are still evaluating the reform package,” she told Dawn in a late-night message. “Our understanding is that it includes a set of tax, administrative and regulatory measures aimed at lifting distortions that could foster private sector activities. That said further tax measures are needed to increase revenue collection in the short term to support efforts to stabilise the economy.”
The finance minister revealed that an economic support package had been finalised with China and more such successes would be available over the next two weeks — perhaps a reference to the prime minister’s recent visit to Qatar. He said exports had started showing improvement and imports compression, leading to a substantial reduction in the current account deficit. “All these unprecedented successes have helped us address the immediate balance-of-payment (BOP) crisis and current account challenge that PTI government faced at the outset,” he added. Razak Dawood chipped in, saying the agreement had been reached with China for the financial support and a team would now visit Beijing next week to finalise how much rice, sugar and textile products from Pakistan should be exported to China.
Read more: What does the future of regional trade in South Asia look like?
The finance minister said a cabinet meeting presided over by Prime Minister Imran Khan on Thursday had approved a settlement plan for dispute over Gas Infrastructure Development Cess (GIDC) with various industries. The plan would now go to parliament for amendment to become law, he said, but declined to say how much revenue the government was targeting to recover from this head.
Responding to a question, Mr Umar hoped the country’s fiscal deficit would remain under control and within limits and about Rs170bn revenue shortfall faced in the first half of the current fiscal year would be recouped through expected recoveries from held-up funds in GIDC and some other administrative measures by the FBR without any additional taxation in the second supplementary budget, except an increase in duties on big imported vehicles.
He said the amendment to the GIDC law would provide an opportunity to gas consumers to pay half of their arrears of 2012-15 and get 50pc relaxation for future rates to end disputes in courts. He expressed the hope that the government would get partial recoveries of the past and secure a revenue stream for future and end a financial risk hanging over various industries which were in courts.
The minister said the GIDC discount of 50pc for fertiliser would be allowed on the condition that fertiliser companies ensured extending its benefit to the farmers in the shape of Rs200 per bag price reduction.
Responding to a question, he dispelled an impression that Jahangir Khan Tareen was affecting his economic decision making and said there was not a single economic decision approved by the prime minister that was not based on his (finance minister’s) proposal and the prime minister had given him full powers and extended full backing.
In reply to another question about ‘own money’ on cars and yet relaxation on purchase of vehicles by non-filers of tax returns to facilitate the automobile industry, the finance minister said there was no justification for extra charges and the government would not let this to go on. “This is not acceptable at all,” he said, adding that car manufacturers would be called immediately to address the issue.
He said the government was addressing fiscal deficit, current account deficit and low reserves before creating an environment for savings, investment, industrialisation and economic growth on a sustainable basis and its performance should be tested on this count.
“This is just the beginning, we have a lot more work to do,” Mr Umar said, promising that the economy would see enduring stability on the completion of the PTI government’s tenure. He said the supplementary finance bill attempted to attract investment, support agriculture and promote small and medium size enterprises and the industrial sector.
Published in Dawn, January 25th, 2019
Comments (100) Closed
We are on path to sharp decline in progress
You can fool all people for some of the time. Someone else will have to worry for repayment, while major world economies are shrinking.
Thank you Asad for taking the nation out of the economic mess
Asad Umar seems to have his financial head screwed on tight! He is pragmatic in his fiscal policies and must have the confidence of the business community to move forward with widespread economic prosperity his vision and goal. Once again, he can not do it all by himself...
Gordon D. Walker Canada
Mr. Asad why you daily change your statement?
While I appreciate the transparency provide by the PTI government I sense some arrogance. Please maintain humility. There is no need to say "the country would neither go down on its knees and surrender before anybody nor would it take dictation for economic support." This has already been articulated eloquently by our PM, Imran Khan. Remember we are going through a very challenging time and best is to maintain focus. No doubt PTI has done a remarkable job obtaining funding to revive the country, however, lets not make enemies with backup resources. Congratulations on a job well done.
It'll be better if any such statements are not given. The whole world including IMF know the reality. It seems that you are doing some great favour to IMF by taking loans.
Well said Asad Umar.
Stop IMPORT of all luxury goods including cars, cosmetics, clothes, phones and expansive building materials.
Ban business of money-exchangers. All money transaction should be through Banks. But make very strict rules and regulatory rules for Banks.
Please get rid of thoughts about borrowing from IMF/IFC.
Rupees will further, likely to be devalued. Rise in price of essential commodities.
Finance Minister Asad Umar and the PTI members, including PM, are they willing to cut their salaries half or more, for the country.
Bailout from the International Monetary Fund (IMF) is probably the safest bet for the country although it is unclear whether the United States will support the program.
You have the right vision. I trust you
"country would neither go down on its knees and surrender before anybody" really??
One Belt and Road or so called CPEC adding IMF another creditor, to its already complicated economic situation.
Mr Asad is a confused man .
Direct Taxes on Pakistani Feudals and Elites needs to happen now! Currently only the little people pay direct taxes!
Global monetary tightening, increased oil prices, and reduced investor confidence, low exports, have negatively impacted Pakistan precarious economic situation. Pakistan has to make deeper cuts, in pensions of govt retired, employees including defense personals.
Agree or not, Chinese investment is often cited as the main driver of Pakistan’s debt crisis.
Does anyone think Nawaz or Zardari brought so much money/Loan from outside? Do you think they could have managed this?
@Aamir,
As far back as last October, AU was saying that we will only go to the IMF if absolutely necessary...and that's exactly what he's saying now. Where exactly is the change?
In fact the only change in his speech is based on whatever the latest rumour is that he has to dispel. First it was that he had fallen out with PMIK, then it was that he was going to lose his job to Razzak Dawood, and now apparently he's taking orders from Jehangir Tareen. So yes, this part of his speech does change regularly, you're right about that.
Do what you have to do..stop this childish behavior and show some maturity. Don't turn everything into a battle. IMF is not obligated to give you a loan.
18 out of Pakistan’s 21 IMF programs over the last 60 years have not been completed despite obtaining over $30 billion in financial support across those programs. How the last governments, PPP, PML-N plundered the nation.
What is he talking about? Nawaz brought the Loans bigger then this (CPEC) from China. Saudi gave away USD 3bn just as a gift But it did not change anything. Please do some thing new or different. Everyone will appreciate
The current U.S. administration and Congress would not be supportive of additional bilateral funding to Pakistan, meaning money coming directly from the United States. They will use the Veto power, supported by UK, France.
A group of 16 US senators has already signed a letter to President Trump that outlines their opposition to bailing out Pakistan because the IMF package would, in effect, be bailing out Chinese banks.
Pakistan’s loans with China are currently unclear and multiple news outlets have reported that Pakistan has refused to share CPEC information with the IMF. Doubt IMF will approve, with US disapproving the loan.
It will be long process, and a long journey to get the IMF loan, this time.
Now you know SIR, the difference between managing a company and a country and the difference between being in opposition and in government!
Good job Mr. Asad. You have taken Pakistan out of a very difficult situation.
PTI will further deepen the economic crisis, as there is no guarantee.
Pakistan not far will surrender to China, like Sri Lanka signed over a 99-year lease for Hambantota Port.
Chinese commercial banks hold 53 percent of Pakistan’s outstanding commercial debt. Pakistan, future is bleak
China, never a friend of anyone, may soon find itself responsible for rectifying the debt burdens of Zambia and many other BRI countries.
Pakistan has regularly failed to meet conditions attached to its previous IMF loans. Trimming spending and privatizing bloated state-owned corporations.
Our country is hugely debt ridden no exports no foreign exchange the only outlet is increasing taxes to pay off huge interest resulting in increased inflation net net the lives of ordinary people will be badly affected. Get to the root cause of poor economic indicators develop a plan to address those, otherwise the country will crumble under loans the other focus should on cost cutting measures across the board
For a business in financial crisis, it becomes imperative to get loans or any other financial deals necessitating payments out of profits or pockets, whichever way is acceptable to the loaners or otherwise contributors. Our ex-business runner finance minister is just trying to do that to get the country out of the problems being faced currently. How the situation will turn out to be remains to be seen. But some of us stand to lose whereas others will gain from any actions undertaken or policies adopted. Political scoring apart, he must engage financial experts and listen to them before deciding about such matters as going to the IMF now or in the future. Our country, if it could survive without compromising our sovereignty any more to the IMF, will do well even if the people have to go for one or two food intakes every day instead of many breaks for the same as is our custom presently.
@HashBrown®, I think the point that is being missed is that after all this if we still go to IMF which is absolutely likely albeit delayed we would have stacked up all this additional debt and have ceded to the IMF requirements. The whole drama would have been avoided if we went to IMF first . They are somehow trying to project a delay in IMF bailout is a moral victory all it is fool hardiness. As far as the IMF is concerned they won’t approve a loan without drastic measures which the government wants more time to take so in the meantime we borrow even more . The exports have not grown at the rate at which the currency has depreciated which when adjusted to real terms means the exports have shrunk . I think a few months from now Asad Umar will take the fall and we will go to the IMF and IK and PTI will be forgiven as AU will take the hit . Politics as usual.
@Sushil, why Indians are so desperately wants to create confusion? What's it to you guys!!!
Asad Umar himself is in panic, doesnt know what to do and what not to do.
only non competent PTI govt is panicking
Pakistan has really fallen short on raising tax revenue. Islamabad needs to tax the people with the money and not further burden those who are struggling economically.
The very fact that Pakistan has taken loans from so many countries it itself suggests that the country has already gone down on its knees
Well done Asad Umar. Pakistani nation fully trusts you.
Why to be in panic when IMF is not giving loan? Forget it completely. You have Qatar, Egypt, Turkey, and may other countries to try.
@Bilal Vaseer, : "Indians against PTI Government" means Pakistan is Alhamdulilah on the right track and Pakistani nation is proud of PTI and PM Imran Khan.
Don't take it personally. Just do what the IMF is telling you to do for the good of the country.
Then why this Man repeating same Sentence every day?
He will be another ishaq dar of Pakistan wait and watch
@SkyHawk, News flash Indians were against zardari and Nawaz government too.
All the “support” given to date is money placed on deposit that we cannot spend but we pay interest on.
That is next to useless when we have a monthly cash deficit of $2 billion. How are we funding that???
The language suggests that there will be no imf loan required in 2019 as enough loans have been secured from friendly countries.
Taxes must be effective and must be streamlined to the following classes.
1) Businessmen and Industrialists 2) High skilled Doctors, Lawyers and Law and Order officials 3) Movie and Sporting Industry 4) Bars and Entertainment centers.
So much ego is not good Sir. Your bottom is burning but you still say we are so self sufficient.
@Anti-Corruption , please also read the views of other Pakistani financial analysts. All of them say Mr Umar has screwed financial talent and is taking Pakistan to a financial doom. His rhetorical analysis and repkued defies economic understanding and only ment for genetal public and political sustainability.
@Kamal, Yes he is knowing the difference, he is working towards it right ?. Not running away from the responsibility, as long as you don't take up the job and do it you won't know what you are capable of...
@Dr. Ali Canada, “..decline in progress..” and the systematic decline actually started many years ago spearheaded by no other than Zardari and Sharif led governments... PTI has only started to pick up pieces!!
Nice brave talk for domestic consumption.
@Aamir,
As usual the modi trolls swarm over here to spread false propaganda!
Pakistan playing with fire...careful
@WARRIs, other than the temporary growth driven current account deficit, PTI government inherited economy with most indicators very good eg higest GDP growth in 13 years, historically low inflation and interest rate and no shortage of electricity and gas.
With their incompetency, lack preparation and decision making, under PTI government all of the economic indicators have started going wrong direction.
@Ash Man , figures suggest they will keep printing local currency and keep getting foreign loans. Since PTI government took over, expenditures have increased further and on the revenue side they are already Rs 170 billions short - this means they will keep getting loans
Pakistan leadership in its own interest should refrain from issuing sweeping statements against US, IMF and India. Gita Gopinath of Indian origin who has recently been appointed as Chief Economist of IMF is responsible as key policy maker and assessing terms of disbursement to countries seeking loan..
Not willing to believe what these people say anymore.
The budget made no provision for oversees pensioners wishing to return. Even a country as UAE is capping overseas Pakistanis offering a 10 year visa. Asad Omar should do more especially as British Pakistanis had always responded to any fund raising call made by PM.
@Bilal Vaseer, how did you know he is indian? Because of hindu name? So a pakistani hindu can not even express his/her view about pakistan's policies, or you think there cannot be any pakistani with such name!
@Dr. Ali Canada, which progresses u r talking about?
@bhaRAT©, as usual the pti trolls swarm the comments
Enduring Stability.....this word is used by all governments like it was a magic cure all. Do they even know the meaning of it?
I am happy to pay additional taxes and cope with insane level of inflation. However, it would have been very encouraging if stolen money from politicians and govt officers was recovered and exemplenary punishments were awarded to those involved.
@Shahid Hassan , Can you get serious now please. Conditions which IMF imposing right now are not just economical. If we accept those conditions than you will hear the scream of Pakistani people in Mars.Thanks to our ex finance minister we are in this mess.
Since politicians are in the habit of always lying one should draw own conclusions.
This man has lost all credible because of daily announcement of YES and then NO. A complete disaster.
Next week he’ll be back at IMFs door
No panic but uncertainty is there.
I’ll wait for the U-turn statement
@bhaRAT©, and looks like IK trolls are insecure.
@Himmat, Exactly that was the attitude of previous governments. We hope and pray, that PTI would not leave us in this mess.
@Bilal Vaseer, How did you presume that he is indian? That kind of name does not exist in Pakistan?... Or people with such name can not franchise their political view about pakistan's internal policy !
And what about increasing use of Yuan in Pakistan?
Thanks to Pakistans allies that Pakistan doesn't need to bow down to IMF. If corruption and Goverment handling before the 90s was reduced. Today Pakistan would have been in a position to give loans to other countries. In the 60s Pakistan was a booming market. We can only hope our respected PM Imran Khan takes Pakistan out of this mess. I hope Khan is elected 3 terms to put Pakistan in a position that corruption is impossible
This same minister will swallow his words and talk to IMF for a loan in the near future.
Local consumption statement. Leader is going every pole to post to get some relief. Anybody in landing business very well know that someone approach for relief what landers will do? No free lunch.
Tomorrow will be another statement saying we are in big trouble
Talk less, act tough, face reality and work hard. There is no alternative.
One can not live on borrowed money forever.
Make Income Tax Officers to collect expected taxes from 30 % to 80 % on national basis.
If they do not perform, dismiss them. Stop corrupion
Sir, whys is it that everyday you have a new story to tell?
@Anti-Corruption , is it a sarcastic post?
Most of the cost of IMF loans is hidden in their conditions. They are the most expensive loans any developing nation can take.
IMF as a Western organization should, pursuing Western political goals.
Try not to go to IMF at all.
@Pervez, That is because every day PTI find a new hole in funds left by Nawaz sharif and Zardari.
@JACKJONES, fully agree, wisdom and not bravado is the need of the hour. Keeping cards close to the chest , woukd be better.
I am still waiting to hear biggest ever investment by saudi arabia..
@Stanley Jacob UK, Very much expected of person whose only credentials are running a private enterprise where he may have few scores of subservient subordinates. Here now, he is made to play with destiny of 220 million souls, whose majority is youth, having no future due to mismanagement, corruption, corrupt practices & bad governess of his predecessors. A colossal undertaking, when you see economy in a sinkhole, IMF’s stringent conditionalities for bailout, uncooperating bureaucracy mainly appointees of his predecessors, almost empty treasury, hostile media & opposition, he being a novice can’t pull miracles.
Keeping in view 87 millions illiterates & equal as semiliterate, who are neither interested nor understand financial jargons, this pep talk is meant to pacify such a crowd & nothing more. With financial despair & gloom hanging all around with no long term respite in view, one should give credit to FM, being a novice caught in this mess, trying to pull his act earnestly together
@Dr. Ali Canada, we are already in a financial sinkhole for all practical purposes. With 1.5 trillion circular debt, 195 public sector enterprises creating a loss of 1.4 trillions so far and adding on, fiscal & current account deficit reaching 8.7% of GDP against growth rate of 4.3% GDP, stagnant revenue & exports, rising import bill, devaluation of currency reaching unprecedented high rate, inflation touching 8% & others. But these have not been created overnight by the present govt. but are the result of mismanagement, corruption & bad governess practiced by the govts. of NL and PPP, who took turns in making this financial mess with impunity.
Not fond of either PTI or the others, while comparing the present govt. to its predecessors, I find this team, though novices & inexperienced, but a honest & resolute lot,which is a rare commodity in the political landscape of the past. Above all, majority of country’s youth population have tied their aspiration & hope to success of its program
@Gordon D. Walker, Good comments. Pakistan for all practical purposes has a small private sector compared to public sector. The PPP’s disastrous nationalization policies of 70’s, have created 195 public enterprises causing 1.4 trillions to public exchequer so far & adding on. If one looks at cotton industry being privatized in the 90’s, it has sustained & still exporting bringing in vital FE to the country. Learning a lesson from success story of developed nations, he finds a small govt. but a large private sector. In order to be economically relevant in the future, we need to be private enterprise friendly, providing each & every possible facility so that it can grow, & become competitive in the international export market.
Notwithstanding, the recent without details mini budget, announcing cosmetic reliefs to local businesses, one is lost to know as to why the govt. is reluctant to carryout structural economic reforms w/o which these temporary reliefs would soon become meaningless
This guys has lost all of his credibility...due to his lack of experience and training in big league..he is like a small pond fish... experiencing hard time swimming in deep ocean waters!
businesses are shutting down and Mr Asad is talking about more taxes? why not get the promised looted money back, jail the corrupt and give respite to the poor. Your are, however intelligent and genius your policies may be, tightening the poor and middle class in a vice!! Please hold your horses on taxing consumers more and more till no one is left to pay any more!
Fin Min is distracting by talking patriotism when serious issue of economy is brought in. Such convenient distraction rings louder alarm bells in minds of those who understand macro economy.
You have to panic about IMF loan , Indian sitting in the one of the highest position in IMF.
This time IMF loan is not Easy.