WASHINGTON: Finance Minister Shaukat Tarin has said that Pakistan and the International Monetary Fund (IMF) could reach an understanding on resuming a $6 billion loan facility during his current visit to the US capital.
“I believe that the progress we have made to date is really encouraging and as we say, God willing, I see this happening now in this visit,” he said.
Speaking at an online event at the US Institute of Peace on Wednesday evening, Mr Tarin also urged the international community to take Pakistan off the grey list of Financial Action Task Force (FATF).
The finance minister said that concluding the sixth round of talks with the IMF on the loan package was the most important part of his visit to Washington.
Says gradual increase in power, gas tariffs likely
The minister has already held a series of meetings with the concerned officials on the issue while the technical level discussions have also concluded.
Mr Tarin, who is in Washington to attend annual meetings of the IMF and the World Bank, said in the final stage he would meet senior IMF officials, including the Fund’s managing director, and successfully conclude the talks.
Asked if Pakistan had agreed to IMF terms on increasing electricity and gas prices and tax rates, the finance minister said that increasing tariffs without structural changes “only increases inflation and makes your industry uncompetitive”.
The minister, however, conceded that Pakistan also had to see the IMF’s point of view and said he had held “some technical discussions” with them on this issue.
“So, we will increase these tariffs in a gradual manner thereby it does not increase inflation a whole lot,” he said.
The minister acknowledged that Pakistan had a problem of capacity in the power sector, created by previous governments, and that’s why it had to make capacity payments. “So, without getting the economic benefits, we are making those payments,” he added.
“But, as the economy grows, it will soak up that additional burden,” he hoped.
Pakistan must also improve the efficiency of public sector distribution and power generation companies, he said, adding that all these issues were “being successfully negotiated with the IMF”.
He rejected the suggestion that raising tariffs in Pakistan’s stagnant economy and per capita growth could be disastrous. “There is no question of this stagnant GDP or per capita growth because this year they will be growing at around five per cent,” he claimed.
Responding to a question about getting Pakistan off the FATF list, Mr Tarin pointed out that the country had already met 26 of the FATF’s 27 conditions while one was half met.
“Any other country that meets 26 of the 27 conditions would have been off the grey list long ago,” he said. “Pakistan is being punished by some countries for different reasons, not economic reasons.”
He also noted that those countries kept repeating the mantra that Pakistan was a terrorist state. “A country which has lost 80,000 people and $150 billion because of terrorism, a country which has suffered for 40 years, how can it be blamed for this?” he asked.
“We all know what the agenda of some of the people — who are putting us on the spot — is. Twenty-six out of 27 conditions have been met by Pakistan, so they just cannot say that we have not made an effort, an earnest effort,” the finance minister said.
He pointed out that the country’s economy had started consolidating when the Covid-19 pandemic hit the world, but the government dealt with it very skillfully.
Pakistan, he said, suffered far lesser human and economic losses compared to the rest of the world as the government kept investing in productive sectors.
Mr Tarin said that within a year the country’s growth rate had increased from minus 0.5 to 4pc, showing a V-shaped recovery.
Around 60pc of Pakistan’s population, he said, was below the age of 30 years who needed jobs, so the government revitalised agriculture, industry, exports and housing sectors.
Published in Dawn, October 15th, 2021