Pakistan’s default risk won’t subside until IMF comes aboard: Miftah

Published December 13, 2022
<p>Former finance minister Miftah Ismail during an interview with Geo News. — screengrab</p>

Former finance minister Miftah Ismail during an interview with Geo News. — screengrab

PML-N leader and former finance minister Miftah Ismail on Tuesday claimed that Pakistan’s default risk won’t subside until and unless the International Monetary Fund (IMF) came to the table.

“IMF is the lender of last resort […] and when it comes on board, other lenders like the World Bank and Asian Development Bank agree to provide us with loans.

“But if that connection with the IMF breaks or a programme is suspended then other loans stop as well and after that you can’t save Pakistan,” he said in an interview with journalist Shahzeb Khanzada on Geo News.

Pakistan entered a $6bn IMF programme in 2019 and its ninth review is currently pending with remote talks being held between IMF officials and the government for the release of $1.18bn.

Earlier, Dawn reported that Pakistan and IMF had had a round of engagement on November 18 but could not finalise a schedule for formal talks on the overdue ninth review.

The talks, originally due in the last week of October, were rescheduled to Nov 3 and then kept on facing delays following gaps in estimates by the two sides.

Earlier this month, incumbent Finance Minister Ishaq Dar said that he was not concerned whether the IMF team arrived or not for the ninth review, asserting that the IMF could “not dictate” the government.

Dar added that he had told the IMF that it was “behaving abnormally” in regard to dealing with Pakistan. “I have never taken dictation and never will from these institutions, I have to look after Pakistan’s interests.”

During the interview with Geo News today, Miftah — in contrast with Dar’s statement — said that “Pakistan has gone back into jeopardy and the situation won’t get better until IMF comes on the table”.

“When IMF gives you a loan, this means they are helping you out. But saying that the Fund is unreasonable […] we need to look at ourselves […] why did we go to IMF previously. Dealing with the IMF is not an easy task.”

He stressed that the country needed to do some things to bring the IMF mission to Pakistan, saying that funds from neighbouring countries could only last the country for so long.

In response to a question on the agreement reached with the IMF during his tenure as the finance minister, Miftah said that all the arrangements had been made before he was replaced with Dar.

“Qatar had promised $3bn, UAE had committed to $2bn and Saudi Arabia had promised $1bn. They had told this to IMF. Separately, our negotiations were underway with the World Bank and they too gave us a commitment along with ADB.

“But all of these agreements were subject to the IMF programme. But if IMF doesn’t come now, then none of this money will come,” Miftah warned, adding it was time Pakistan took some difficult decisions.

He reiterated that “if IMF doesn’t come then it will be very difficult to save ourselves from a default”.

Dar says Pakistan’s performance for IMF’s ninth review up to mark

Meanwhile, in an appearance on SAMAA TV programme ‘Nadeem Malik Live’, Finance Minister Ishaq Dar said that Pakistan’s performance criteria were up to the mark and “complete” for the IMF’s ninth review.

He said the IMF looked at the overall direction of a particular quarter, including structural reforms and fulfillment of conditionalities, which was “logical”.

Dar said Pakistan had eroded its credibility before the IMF due to the actions of the previous government and the Fund was asking for further information rather than just the current quarter. He expressed the thought that the IMF might combine the ninth and 10th reviews for the country due to the upcoming holidays.

“They want that we give them [data for the] whole fiscal year after working it out,” Dar said, adding that Pakistan was providing the information asked for.

The finance minister said the Fund was also asking questions about flood rehabilitation and where Pakistan would procure the funds for it, adding that it was “unfair” to do so.

“They’re basically asking about our financing plan] and we are also preparing it,” he added, saying that a “realistic picture” would be provided to the IMF.

To a question on whether the ninth and 10th reviews would be complete by January, Dar said the government was preparing for that and “we have to complete this task in the next few days.”

Pakistan seeking financial help from Saudi Arabia

The finance minister also said that Pakistan was seeking financial help from Saudi Arabia which will include doubling the current deferred oil payment facility given by Riyadh to $2.4 billion per year.

“I have discussed both things (financial help and oil facilities) with the Saudi finance minister, and there are positive vibes from there. They said they will support us,” Dar said.

He said the government was in touch with Saudi authorities but did not give a time frame for the aid.

Dar also said that Islamabad was looking at purchasing discounted oil from Russia and that he had discussed the matter with officials from the US State Department back in October.

Dar said US officials had told him that a G7 pricing committee was being set up for Russian oil products and that there would be a price cap.

“[They said] you shouldn’t buy [oil] for above that, and I agreed,” he said.

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