Dar assures nation IMF deal on track a day after cancelling Washington visit

Published April 8, 2023
Finance Minister Ishaq Dar addresses the nation on Saturday a day after cancelling his US trip. — DawnNewsTV
Finance Minister Ishaq Dar addresses the nation on Saturday a day after cancelling his US trip. — DawnNewsTV

Finance Minister Ishaq Dar on Saturday said that everything required from Pakistan to conclude the much-delayed ninth review of a $7 billion loan programme with the International Monetary Fund (IMF) was “now complete”, and the one final thing needed was a confirmation of a $1bn commitment from a friendly country.

The finance minister addressed the nation a day after he cancelled his visit to Washington for spring meetings of the IMF and World Bank citing domestic political turmoil as the reason.

His speech centered around him trying to calm the fears that the cancellation of his trip was any indication on the future of the IMF deal — a $6.5bn rescue programme agreed in 2019, of which the government has been trying to secure the final tranche of $1.1bn since February.

Dar said that the government had already done all that was required from it to conclude the ninth review. He said that at the time of the seventh and eight reviews, two friendly countries had informed the IMF in writing about its offer to help Pakistan with its external account.

“The two-month delay from mid-February was due to this reason,” he said. “In the past two weeks, one of our friendly countries has again given them (the IMF) the confirmation [of its commitment to help Pakistan] with $2bn.

“We are now only awaiting the confirmation of a $1bn commitment from one friendly country. After that, all their requirements to conclude the staff-level agreement will be complete. Following that, it takes two more weeks to take the matter into the board meeting.”

Dar acknowledged that there was a new development with the IMF deal over the past few weeks due to the “cross subsidy” in the works regarding fuel prices.

He said that the subsidy involved charging more to the affluent and providing relief to the underprivileged, adding that it had nothing to do with the budget. “We also had several rounds of communication with the IMF. As soon as that news broke they asked us ‘What are you trying to do?’ We gave them a satisfying answer because that subsidy is not a part of the budget.”

Dar did hint that the hold-up to the ninth review had more to do with the IMF’s part than the government’s.

“When I went to the IMF with my delegation in October 2022, I invited them to Pakistan for the ninth review, which is technically the September 2022 review,” he said. “For unknown reasons, they finally came to Pakistan on January 2023.”

Dar said the nine-day review was “the most difficult negotiations” and it was concluded, which led to the government taking prior actions demanded by the IMF, including the imposition of new taxes worth Rs170bn.

“What is this delay for then?” Dar asked rhetorically.

The finance minister blamed the previous PTI government for the country being in the position with the IMF.

“Immediately after the Shehbaz Sharif government took over, the seventh and eighth reviews were combined, which the previous government couldn’t do because it had not only not implemented its sovereign commitments but also reversed whatever it had done [when their government was winding down],” he said.

Regarding his now cancelled US trip, the finance minister said that he was scheduled to participate in the spring meetings of the IMF and World Bank. “These are routine rituals, however, a constitutional crisis has been created in Pakistan.”

Dar pointed at the Supreme Court’s orders for the federal government to give Rs21bn for elections in Punjab by April 10. “Of course, the finance ministry and the cabinet have an important responsibility in this regard, and I’m a part of it,” he said.

“Due to these circumstances and on the prime minister’s directives, I have dropped my plan to visit Washington [physically]. This is not an unusual thing. Virtual meetings took place during Covid. I will be attending the World Bank, and IMF meetings that I’m required in from Islamabad.”

The minister said that even though he won’t be attending the meetings in person, a delegation representing Pakistan will be there.

“It’s astonishing that some are saying that I have been told not to go by the IMF. The IMF cannot tell me not to attend. Pakistan is a member of the World Bank and the IMF. It is not a beggar,” he said.

He accused some analysts of twisting the facts. “Someone is writing that I did not get the meetings I wanted. Someone else is suggesting that I should have ignored the [domestic] crisis and gone anyway,” he said.

“These are national issues and such loose talk over them is not appropriate.”

Dar said that despite the worst of the liquidity crisis, the country did not delay its global sovereign payments of $11bn by “even a minute”. “Therefore, for God’s sake, please do not portray a picture that harms your own country’s interests.”

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