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Asad to hold crucial talks on IMF package in US this week

Updated April 07, 2019

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A file photo showing IMF MD Christine Lagarde shaking hands with Finance Minister Asad Umar in Bali as they meet on the sidelines of the IMF. — Photo courtesy IMF Twitter
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A file photo showing IMF MD Christine Lagarde shaking hands with Finance Minister Asad Umar in Bali as they meet on the sidelines of the IMF. — Photo courtesy IMF Twitter ‏

WASHINGTON: Pakis­tan is likely to hold crucial discussions on an IMF bailout package this week when Finance Minister Asad Umar arrives in Washington to attend the spring meetings of the World Bank group, which includes the International Monetary Fund.

Mr Umar said at a news briefing in Islamabad on Friday that he hoped his discussions in Washington would be fruitful and Pakistan would be able to sign the bailout package by the end of this month.

He is expected in Washington on Tuesday, a day after the spring meetings (April 8-14) formally begin. An IMF mission will visit Islamabad later this month to formally conclude the package.

Indian lobby in Washington has launched campaign to block the package

The Indian lobby in the US capital, however, has already launched a campaign to block the expected IMF assistance for Pakistan. On Friday, three congressmen — Ted S. Yoho, Ami Bera and George Holding — sent a letter to US secretaries of State and Treasury, asking them to prevent the IMF from concluding a deal with Pakistan.

The congressmen claimed that Pakistan would use the IMF package to repay China for the loans incurred under the China-Pakistan Economic Corridor (CPEC) programme. Two of these lawmakers — Mr Bera and Mr Holding — are co-chairs of the Indian caucus in Congress.

In October, Pakistan formally requested the IMF for an economic assistance package and backed it up with a series of meetings with senior IMF officials.

Pakistan’s persistent economic woes — mammoth deficits, shrinking foreign currency reserves, low exports, diminishing tax revenues, a weak currency, external debt payments, and soaring sovereign debt — have forced the country to seek its umpteenth IMF bailout package in three decades.

So far, measures to ease the impact of this economic crisis — currency devaluations, loans from Saudi Arabia, UAE and China and the issuance of Pakistan bonds — have failed to achieve the required result of not seeking an IMF bailout package.

In February, IMF Managing Director Christine Lagarde met Prime Minister Imran Khan in Dubai and said they had a “constructive” discussion on an IMF-supported programme for Pakistan. “I reiterated that the IMF stands ready to support Pakistan,” she said, but also emphasised the need for “decisive policies and a strong package of economic reforms”.

Later, a senior Pakistani official told journalists that the conditions associated with a loan could “include some harsh measures and the government will have to be very prepared to explain why Pakistan has been forced to return to the IMF”.

On March 27, the finance minister met the new IMF mission chief for Pakistan, Ernesto Ramirez Rigo, in Islamabad and discussed fiscal, monetary, and structural reforms with him.

Mr Umar assured Mr Ramirez that “the government would continue to address the macroeconomic imbalances and would take necessary corrective measures in this regard”, according to an official statement issued after the meeting.

This week, the Asian Development Bank (ADB) projected further deceleration of Pakistan’s GDP growth to 3.9 per cent and rising inflation pressures on average at 7.5 per cent for the ongoing financial year.

The ADB’s Asian Development Outlook (ADO) 2019 also noted that Pakistan was discussing a macroeconomic stabilisation programme with the IMF to meet its large financing needs.

Published in Dawn, April 7th, 2019