IMF loan much cheaper than other programmes: Hafeez Shaikh
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Adviser to the Prime Minister on Finance, Hafeez Shaikh, on Saturday said that the International Monetary Fund (IMF) loan programme that Pakistan is about to enter into has a lower rate of interest as compared to other programmes.
The advisor on finance acknowledged that the programme was being debated upon heavily in the media as well as by the country's intelligentsia.
"The IMF is an organisation which has been formed solely to assist member countries which are faced with financial difficulties," he said during a press conference in Islamabad. "It is not a new thing and many countries have availed the facility as have we in the past many times.
"The programme we have obtained has a magnitude of $6bn and is spread over three years. The good thing about it is that the rate of borrowing is much lower than other programmes. The interest rate is 3.2 per cent."
Shaikh said that entering the programme would "send a good signal to the international community that Pakistan wishes to take its economy forward in a disciplined manner and people will find incentive to form alliances and partnerships with us".
Shaikh also laid out a road map for what is to come in the coming weeks with regard to economic developments in the country, indicating that important decisions will be made after the upcoming budget announcement.
The advisor highlighted six points to this effect:
A staff-level agreement was reached with the IMF and over the next few weeks their board will accord their approval and the programme will become operational.
In Pakistan, due to the benami law and other traditions of the past, there is a lot of money which is not part of the formal economy. A scheme will be introduced to make all the cash, real estate and other assets — both here and abroad — part of the economy.
The oil facility provided by Saudi Arabia worth $3.2bn per year for three years will become operational on July 1. The pressure on foreign exchange reserves will be reduced as a result.
Besides the IMF programme, we will be able to borrow an additional $2-3bn worth of programme loans from the Asian Development Bank and World Bank.
The annual budget will be announced. The government's philosophy and determination to bring Pakistan on track for stability and prosperity will be reflected in the budget.
The Islamic Development Bank's deferred payment facility worth $1.2bn will continue in the year to come.
Asset Declaration Scheme
The advisor on finance also spoke regarding the Asset Declaration Scheme recently approved by the cabinet.
"As far as our asset declaration scheme goes, we have made things very easy. Any Pakistani national anywhere can benefit from the scheme. The rate is only 4 per cent.
"If it is cash [you wish to declare] then you will have to show the money in the bank. And if it is real estate, then according to the approximate market value and [tax] payment at 1.5 per cent, you can have it [the property] "whitened".
He said that the intention is to make "dead real estate assets" a part of the economy and to increase the tax base with such declarations.
Shaikh took the opportunity to remind everyone that the deadline to avail the scheme is June 30, after which "it is natural that action may be taken against individuals who did not avail the offer timely".
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Comments (105) Closed
May 25, 2019 06:40pm
Cheaper than Iron brother’s loans??? What exactly the iron brother is doing with you guys???
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May 25, 2019 06:44pm
Nothing is more cheaper and dignified than earning your own money, rather looking for loans from somebody. The solution to the problem is to decrease operational expenses of the current government. We can save around 1 Billion US Dollars only by cutting the military budget by 15%. Similarly government operational expenses cut ( federal and provincial) by 20% can churn another 1 Billion US Dollars. Take Mercedez Maybachs and Helicopters from Ministers including Imran Khan and give them cheaper locally made Hondas or Toyotas. Start saving on almost everything.
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May 25, 2019 06:47pm
Shame
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May 25, 2019 06:48pm
You are an agent of IMF world Bank and USA Mr sheikh
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May 25, 2019 06:53pm
"A scheme will be introduced to make all the cash, real estate and other assets — both here and abroad — part of the economy."
If wishes were horses...
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May 25, 2019 06:58pm
But IMF loan-CONDITIONS are not much cheaper than other programmes.
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May 25, 2019 07:00pm
The only "cheap" thing about the IMF programme is the mindset of negotiators who sold out Pakistan for temporary relief.
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May 25, 2019 07:01pm
Loan is loan. Do not feel proud.
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May 25, 2019 07:02pm
IK and his team are working hard to bring the economy back on track. It's not easy to clean up the mess left by decades of corruption and money laundering. As patriot Pakistanis it is our responsibility to help the government overcome this difficult situation. Instead of criticizing and spreading rumors, let's do something good for our beloved motherland. On Monday I'm sending $ 5000 to my family in Pakistan through bank. Can we all overseas Pakistanis do the same or as much as we can ?
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May 25, 2019 07:06pm
Yea!, IMF Loan is cheaper, tell this to an ordinary citizen trying to make ends meets for daily basic ration.
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May 25, 2019 07:08pm
How comes that IMF loan has many advantages for your govt and harmful and dishonesty for the previous governments. Take IMF loan if it is crucial for your govt but at least, please do not tell us its merits. We have heard something else from PTI leader about such loans.
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May 25, 2019 07:09pm
@Malik Saab, Next time join the politics.Unless you had your chance.
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May 25, 2019 07:23pm
Whatever it is, a loan is a debt, which is like a "pain in the neck" and must be fully paid off with interest and sweat.
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May 25, 2019 07:26pm
Don't tell me that Chinese loans are more expensive!
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May 25, 2019 07:31pm
That is because $ / £ borrowing rates are near zero. In fact at the moment there is even negative rates on some bonds. 3.2% is not cheap but it does reflect how poor our credit rating is !
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May 25, 2019 07:32pm
Hope the PML(N; and PPP will stop their campaign about hidden conditions of IMF loan.
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May 25, 2019 07:40pm
IMF loans are not only cheaper, but also the repayment can be managed easily by getting further loans. Whereas loans from China or KSA will have strings attached. If you default CPEC loan, then asset needs to be handed over to China.
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May 25, 2019 07:48pm
But, the idea was- never go to the IMF. IK thinks running an economy is similar to crowd funding as he did in the case of Shaukat Khanum. The question is - is it sustainable way of development?
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May 25, 2019 07:48pm
A honest and hard working man pays 8%-12% tax while registering his property and a crook can whiten his I'll gotten wealth by paying 1.5%. Naya Pakistan seems like the same old looting and plundering.
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May 25, 2019 07:53pm
Now we need to put all our focus on governance to put the economy on sustainable path!
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May 25, 2019 07:54pm
Cheaper than Chinese loans?
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May 25, 2019 07:54pm
@Indian, exactly, what is the meaning of stronger than steel and sweeter than honey?
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May 25, 2019 07:56pm
Is it 1sr April today ? The currency devaluated +30 % , income tax will be +25 % higher and he is happy, wow !
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May 25, 2019 07:58pm
Then why didn't you go for it from day one. Was IK ego more important.. what's about the resources and costly loans taken because of shying away from IMF
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May 25, 2019 08:04pm
The current SDR is 1.112 and the adjusted average rate of charge is 2.12 for IMF loans, so no, 3.2pc interest rate is not cheap.
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May 25, 2019 08:04pm
It's true IMF loan is much cheaper. It also enhances the financial credibility of the country. Conditions to avail the IMF loan are tough but that is for the benefits of borrower. So much hue and cry on the IMF loan that is totally un called for. What options do we have? Not much. It is not that beggers can't be choosers. It is time to rise to the occasion. Make reforms and do everything to improve the economy in such a way that this IMF loan must be the last.
I am not great fan of amnesty scheme or assets declaration scheme because I think it is unfair to the existing tax payers. But if it is necessary to bring the economy on track than swallow the bitter pill. May be this is our last chance to improve the life standard of our people. If I'mran fails ,once again thieves and dacoits will rule us. Treat this opportunity as survival of our life.
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May 25, 2019 08:11pm
We are borrowing money on 'interest'. We can never prosper with this money. Never ever.
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May 25, 2019 08:25pm
Excellent leadership......time to refinance Chinese loans.....
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May 25, 2019 08:28pm
Then also disclose the terms of CPEC and let the people know about it in comparison to IMF
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May 25, 2019 08:41pm
Loan from IMF, deferred credit for oil from KSA, loans from others and more. This is after loans from KSA, UAE, IMF's old loan balance of $5.75 billion and others making up over $100 billion. Compounding method says first 100 takes time and next one's take no time.
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May 25, 2019 08:45pm
Keep working hard and get the country out of this PMLN PPP created mess!
If and when Pakistan is out of this mess, corrupt individuals must never be allowed to run the country ever again...
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May 25, 2019 08:55pm
So if China is iron brother, IMF is steel brother.
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May 25, 2019 09:00pm
PMIK is getting the right team in place and once positioned, the winning streak will commence. Then all the enemies will be left behind,gaping. Pakistan is destined for far higher achievements and level than just a regional power of South Asia.
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May 25, 2019 09:05pm
@Indian, Not your concern. You just worry about your $680 billion debt payments due. Look for anyone who could save you.
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May 25, 2019 09:07pm
@Malik Saab, The Budget has laid out the plan,it only needed a good team to implement it. A journey of a thousand miles begins with one step. Wait the 5 years of PTI and then see the difference. To date no corruption at top that itself is a big achievement.
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May 25, 2019 09:08pm
The haggling that went on to secure this loan tells a different story about the terms and conditions. Just what is the harm in admitting that it was not an easy matter to finalize? Please don't think that your country people are all fools who would accept what you want them to. Of course, we know why you have been imposed upon us by the IMF.
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May 25, 2019 09:09pm
@Qamar, No he is not. He is a patriotic Pakistani with many years of experience and is now using it to help Pakistan out of a mess, created by past governments. The road now, is to have trade surplus and pay off loans with no need for borrowing in future. Course adjustments take time, have patience.
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May 25, 2019 09:10pm
All talk is about borowing. No talk about reforms
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May 25, 2019 09:28pm
@Malik Saab, It’s very easy to declare lowering the defense budget by 15% when your enemies keep increasing theirs, unless you understand the threats faced at the border, you cannot just lower your guard, it’s not just about the money when you consider what’s at stake to protect your homeland. Simply put, you cannot cut the defense budget, you just got to make every citizen accountable and collect taxes, period.
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May 25, 2019 09:32pm
What is needed today is a complete rejig of the taxation system - widening and deepening of the tax base. Borrowings will just keep on adding debt of the country while indigenous revenue generation can promote growth and reduce the deficits
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May 25, 2019 09:33pm
What "other programmes "?
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May 25, 2019 09:33pm
how can the loans from IMF be cheaper than our friends China and Saudi Arabia? Surely there is some confusion.
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May 25, 2019 09:37pm
Cheaper ?
May be that's why you didn't disclose any of the IMF's stipulations in the parliament !
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May 25, 2019 09:37pm
Yeah IMF loans are cheaper. And recovering of looted money from individuals present in country is mission impossible. Make that mission possible. You will not need the IMF tantrums.
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May 25, 2019 09:38pm
IMF is used as scapegoat to implement prudent but politically unacceptable fiscal policies. Implementing those policies is what gives greater credibility and opens the door for other lenders. It's a shame that we have to use outsiders to force us to make necessary policy adjustments.
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May 25, 2019 09:40pm
Then why to take loan from brothers, just to fill our own pockets and put the country into debt
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May 25, 2019 09:47pm
On the right track but more needs to be done.
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May 25, 2019 09:47pm
IMF is bad when others do it
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May 25, 2019 09:49pm
No one is offering other programs.
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May 25, 2019 09:49pm
Defense expenses eat a big chunk of the budget. Now the need is to cut defense budget by 15% to 20% in order to give a relief general public. Government at all levels must take austerity measures immediately.
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May 25, 2019 09:51pm
Great !!!
Unfortunately your cricketer leader was sleeping over 8 months. Probably he was unable to calculate.
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May 25, 2019 10:07pm
has a lower rate of interest as compared to other programmes
----
What are the other programs?
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May 25, 2019 10:09pm
"---- IMF rate of borrowing is much lower than other programmes--" Most notably the CHINESE programs such as CPEC. Trust the general mass reads well the message.
IMF aim is to help/bail out - Chinese pure business.
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May 25, 2019 10:18pm
All the people who are writing negative comments against IMF and USA, can you clarify what have they done to you? You are in a mess because of corruption and blaming the people who are helping you.
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May 25, 2019 10:36pm
Hollier then thou, must first asked,why we needs the loan. If pmln was handling the economy for the betterment of Pakistan, two questions, why pmln nawaz bussiness is making money, Pakistan steel mill is closed,if Darr was honestly creating a robust ecomony for Pakistan, why is he in UK? If it was pmln nawaz,and zarradari own money,why would you creates many fake accounts. There is no denying, pmln ,and PPP in sindh,have hollow out Pakistan economy! Ironic ,these nay Sayers of IMF ,who are bringing funds to Pakistan economy by given loan ,thinks ,IMF, they should worry about? IMF can not hurt Pakistan like pmln nawaz,and zarradari , shameless !
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May 25, 2019 11:17pm
No lives of Pakistani people are much cheaper than IMF programme in eyes of establishment.
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May 25, 2019 11:21pm
You have become part of the team of the blood suckers of poor and middle class of Pakistan. Don't worry, your name has also been included by the nation who is day and night cursing the present government on its anti-poor and anti-middle class policies and then you say "don't worry, every thing will be alright after July".
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May 25, 2019 11:22pm
What other programme is it cheaper to? It is unique and bears no comparison to the others. It cannot be compared to loans from other institutions or countries and bears no resemblance to what is being carried out under CPEC.The people who undergo sharp price increases under it would certainly not agree that it is cheaper.
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May 25, 2019 11:34pm
IMF loan may be cheaper for the Government but, crushing to the bone for the masses due to it's traded-in inflation and dollar hike.
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May 25, 2019 11:39pm
If IMF loan is so cheap..... Why you wasted so much time accepting it......?
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May 25, 2019 11:42pm
Cheaper? Just the conditions laid down on the exchange rates have increased the debt by incalculable billions.
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May 25, 2019 11:46pm
not seen any comments to reduce expenses
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May 26, 2019 12:20am
@Dawood, World over countries pay interest on borrowed money .They prosper after that.
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May 26, 2019 12:21am
@Zak, "PMIK is getting the right team in place and once positioned, the winning streak will commence. Then all the enemies will be left behind,gaping. Pakistan is destined for far higher achievements and level than just a regional power of South Asia." You told us the same thing about the game changer CPEC. Is this an another kind of CPEC?
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May 26, 2019 12:32am
Why don’t we just start collecting 1.5 percent property tax from each homeowners and I bet you that will be enough to cover at least to run a healthy economy. Also make that tax collection for every person to be transparent or publicly available. Also start taxing on rental incomes while establishing law that how much rent can be charged while spending the portion on each tax payers towns. Make this 100% foolproof from most of our who we called leaders so there is no way they can exploit that government earned income while use that income to improve poor people lives then wait at least 10+ years to see the real results of the economy driven by tax payers.
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May 26, 2019 01:07am
Bitter medicine for a sick patient. Well deserved.
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May 26, 2019 01:33am
Definitely and Guarranteed much cheaper than the "All Weather Friend's" loans.
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May 26, 2019 01:36am
Pak should carve out lands near the Balochistan coastline and build appartment buildings of at least 50 plus stories then sell it to the Europeans and US citizens. I am sure many Europeans and US citizens will buy them as a second home.
It will create a lot of jobs and bring in much neede foreign exchange plus property taxes will increase revenues. However, security will be the key.
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May 26, 2019 01:56am
People have elected the new government and it seems that they have been doing their best under the situation at hand. It is easier for outsiders to criticize and give constructive ideas. Government actions may be the best for the country.
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May 26, 2019 01:56am
Cheapest is chinese loan. The whole world knows this. PMIK is the best
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May 26, 2019 02:15am
@Zak, "the winning streak will commence. Then all the enemies will be left behind,gaping. Pakistan is destined for far higher achievements and level than just a regional power of South Asia."
Hopes are stronger than experience, Dreams are stronger than reality, Fantasies are stronger than reasoning. Come out of the fantasy world and see the reality.
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May 26, 2019 02:24am
3.2%i is cheaper than Chinese and Arab loans but it is still relatively high given interest rates across Europe and America. Given the loan is in dollars and repayment I'm dollars, the IMF has got s great return. Furthermore, if the ruppee devalues significantly over the term, the actual repayment rate could be significantly higher.
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May 26, 2019 02:27am
If our nation still believes in sugar-coated sentences and awaits a miracle to happen then it has no one else other than itself to blame for falling for such statements.
You believed them. You got convinced they would bring about change. You voted them in. Now pay the price. If you don't learn from your mistakes then you have no one else to blame. Their track record in managing a province was substandard and full of coverups. If that wasn't enough to jolt the nation out of stupor then nothing in this world can wake them up.
Wish fairy tales were true and someone could break this magic spell and wake up our nation that still falls for convoluted utterances by the ones controlling media.
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May 26, 2019 02:33am
@LAHORI KID, well said.
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May 26, 2019 02:36am
Great Articles for student like IK.
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May 26, 2019 02:36am
Sigh, another Western agent
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May 26, 2019 02:39am
@K Khan, China is doing BUSINESS in your country
they are not there to offer you free stuff
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May 26, 2019 02:44am
@Dr. Salaria, Aamir Ahmad, sure pay off the loans
with what money?
more loans?
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May 26, 2019 02:50am
Never knew loans are commodities that are purchased and sold....what is cheap is our self respect..Never be bullied into silence. Never allow yourself to be made a victim. Accept no one's definition of your life, but define yourself.
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May 26, 2019 02:54am
@LAHORI KID, fyi.. every neighbour got a problem.. with Pakistan.. not vise versa
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May 26, 2019 03:21am
Loaning ones way to prosperity makes one a terminal debtor
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May 26, 2019 03:30am
Greece which defaulted on its IMF loans had a similar problem. -- In Pakistan, due to the benami law and other traditions of the past, there is a lot of money which is not part of the formal economy. A scheme will be introduced to make all the cash, real estate and other assets — both here and abroad — part of the economy. -- This is a stumbling block toward financial progress.
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May 26, 2019 03:42am
@M. Emad, .... and you would know that why?
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May 26, 2019 03:46am
@Dr. Salaria, Aamir Ahmad, .... Without shoring up reserves the rupee will be used for toilet paper.
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May 26, 2019 03:49am
@Shy Guy, .... Imran had to judge how anti-American he was going to be in order to please the people.
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May 26, 2019 03:51am
@Shubha, .... If I could borrow $1 million at 3,2% I would go to Monte Carlo and get rich.
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May 26, 2019 04:12am
All those who oppose IMF should be asked about the alternative measures.
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May 26, 2019 04:31am
I keep hearing about loans already taken and more might be happening soon. What I don't hear is new initiatives and strategies that will create jobs, growth, exports, education and health. Without those efforts, more new loans would be needed to pay back interest and principal on old loans.
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May 26, 2019 04:52am
Seems all plan is to take more loans and delay the issue and make issue impossible to deal in future. Also seems trying to help friends to eighteen money with just 1.5% tax on real estate and 4% on cash. There is not a single place in the world where tax is so low on unpaid income (it is black that is other issue).
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May 26, 2019 05:00am
here every one is telling problems but no body is ready to give solution. Problem government knows also, solution if other than IMF. YOu bring it. shameless society we are living.
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May 26, 2019 05:03am
@Zak, - he was finance minister in the past PPP government before Nawaz government so he was part of previous government you are blaming.
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May 26, 2019 05:35am
@Canadian, US economy is nas d loan, the biggest economy of the world. Loan is not inherently bad if I used wisely and honestly for stakestakeholder.
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May 26, 2019 05:48am
Take it any how you dont have to pay declare yourself bankrupt.
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May 26, 2019 05:48am
During budget session .... copies of the budget would be torn in lower house as per past routines .........
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May 26, 2019 06:09am
Real seriousness will come if the sacred cows budget is reduced.
Look I understand the need for a strong security, but perks and plots mentality has to go.
For a third world country that sees it as normal to go begging yes begging to other countries should cut back on the ridiculous perks of civil service
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May 26, 2019 06:13am
@HAMZA, the Economy is a mess and it is better to suffer pain and upheaval now
The country is full of crooks dodging tax and accepting subsidies - even UK had to go through a bad patch before recovering
I’m the 1970’s UK had load shedding and went to IMF
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May 26, 2019 06:13am
@M. Emad, IMF conditions are what Pakistan should have been doing on its own, that is, live in its own means. Why subsidize gasoline, electricity, why keep dollar constraint which hurt exports.
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May 26, 2019 06:33am
@Qamar, Agent as a word and as a concept seems quite popular in Pakistan.
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May 26, 2019 06:50am
Dr. Hafeez implicitly mentioned at what rate of interest our iron brother has given us loan!!
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May 26, 2019 06:52am
Dr.Sheikh is good technocrat and he has proved his worth through his demand .
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May 26, 2019 07:02am
@Malik Saab, Defence budget is the holy cow that no one can touch. It is the main reason why we keep getting into this mess.
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May 26, 2019 07:44am
Stop propping up Politicians with benefits. Remember the scandal over MPs expenses in the UK? PM Junejo stopped all luxury cars. Give them a petrol allowance and tell them to use their own cars. Give them a phone with a number to use only for government purposes which can be audited, tax land!!!!!!
Since all of the politicians are landowners it's never going to happen...
We should be worried about the environment, in a relatively short space of time we will have no planet left but in the meantime, stop coal based plants from functioning, generate more solar energy, use water power, spend money on education because if not then the next generation is not going to be any the wiser...
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May 26, 2019 07:58am
@Zak, Hey hey. Do not worry for India economy. The best able person are doing their job perfectly. India is the fastest economy in world.
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May 26, 2019 12:42pm
What economic college Shaikh attended. First Pakistan deficit is about 25 billions US dollars a year . How $ 2 billion will help. 3.2 percent interest is more than our economy growth, how will you pay since there is no profit. And last no one likes to do business with broken countries. More you borrow more you loose confidence in business community.
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May 26, 2019 09:37pm
Where do they get these people from.
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