PM Shehbaz wants current IMF programme to be Pakistan’s last

Published June 30, 2023
Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar address a press conference in Lahore on Friday. — RadioPakistan
Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar address a press conference in Lahore on Friday. — RadioPakistan

Prime Minister Shehbaz Sharif on Friday urged that the $3 billion staff-level pact signed with the International Monetary Fund (IMF) earlier today should be Pakistan’s last loan programme with the Fund.

The staff-level agreement is on a $3bn stand-by arrangement, which is subject to approval by the lender’s executive board, the IMF said. The long-awaited decision comes after an eight-month delay and offers some respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.

Earlier today, Information Minister Marriyum Aurangzeb announced that the premier and the finance minister would address the nation to take them “into confidence” on the IMF deal.

In a press conference in Lahore alongside Finance Minister Ishaq Dar, Aurangzeb and Punjab Governor Balighur Rehman, PM Shehbaz offered eid greetings to the nation and the global Muslim community.

“Today, as you all know, our interaction with the IMF which was under way for many months reached a very positive conclusion and you all must have read the IMF statement. I don’t need to say anything further on it.”

Despite that, PM Shehbaz said it was not a “moment of pride but a moment of contemplation”, questioning whether nations developed on the back of loans.

“Never, forget this, we were forced to take this loan and it is my prayer … that this is the last time Pakistan goes into an IMF programme and we never have to take a loan again,” he added.

PM Shehbaz reiterated his sentiments in a later tweet.

Regarding his talks with IMF Managing Director Kristalina Georgieva, the prime minister said he had had multiple conversations and exchanges with her in which the finance minister and his team presented their facts but despite all that, no progress was being achieved.

He added that in a meeting with the managing director in Paris last week, he had told her that the government had fulfilled the Fund’s conditions and put its political capital at stake “just so that we can prevent Pakistan from defaulting and we took bitter steps for the country’s economic stability”.

PM Shehbaz said Georgieva had told him about two to three further measures that needed to be taken and he had reassured her not to worry and that he would immediately try to achieve progress in those areas.

He added that the managing director had raised concerns about the external financing gap of $2bn, following which he said he told the finance minister to make a “final effort” on that front to resolve the IMF’s “serious doubts”.

Shehbaz further said that he subsequently had a meeting with the president of the Islamic Development Bank who had then announced $1bn in funds for Pakistan.

He added that he again held meetings with the IMF managing director who reassured him of moving forward together. The prime minister termed that moment the “ice-breaking and turning point” in Paris, following which Georgieva had called him and said that many things were fast progressing in terms of the IMF deal.

“This is how I can say that the staff level agreement is complete which is a very big step towards the [IMF] board [approval],” the prime minister said, adding that the IMF board will have its meeting on July 12 in which the $3bn stand-by agreement will be taken up.

“God willing the instalments will start coming in after the July board meeting. I am very thankful to the IMF managing director and her team that they showed sincerity after the Paris meeting and cooperated alot. I am also thankful to Ishaq Dar and his team.”

Role of allied nations

The prime minister also acknowledged and lauded China’s role in stabilising Pakistan during the past few months during talks with the IMF, saying that it had saved the country from default in the past three months by rolling over $5bn in loans.

Shehbaz said Saudi Arabia and the United Arab Emirates had also similarly helped out Pakistan. The premier added that Sri Lanka’s president had also played a crucial role in appealing Pakistan’s case to the IMF in the Paris meetings.

PM Shehbaz further said that Chief of Army Staff Gen Asim Munir had also played an important role in securing the funds from Saudi Arabia and the UAE. He also credited Foreign Minister Bilawal Bhutto Zardari’s efforts for diplomacy in the matter.

“What is the plan of action for the future? This life of loans will not end like this.”

The prime minister said his government had unveiled a mechanism in the past few days for this end, referring to the Economic Revival Plan. He stressed that agriculture could play a big role in the country’s economic progress, adding that the government had developed a complete plan for the sector’s revival.

Other areas he outlined that could lead to development in the country were information technology and production of defence equipment. He said all sectors of society, classes and institutions would have to contribute and play their part in the country’s economic revival.

Shehbaz said the Economic Revival Plan would lead to employment for four million people, bring billions of dollars in investment from the Middle East and business agreements.

“Its not about you and me, it’s about us and Pakistan. It is my faith that Pakistan will progress and no one can stop it.”

The prime minister said it was necessary to know the reasons for the “mountain of difficulties” that were faced by the people. He said Pakistan was fast progressing development-wise till 2018, adding that it was something even the then-government’s opposition could not deny.

Lambasting the previous PTI government, he said it had shown reluctance in engaging the IMF for talks and delayed the process for six months, adding that once the programme was eventually agreed to it was subsequently violated.

He also said there was “criminal negligence” displayed by the previous government during the Covid-19 pandemic by not availing things in a timely manner such as cheap LNG.

Commenting on the coalition government’s performance in the past year, he said it might have committed “honest mistakes” but also strove to tackle the country’s issues.

“Worst ever floods came [last year], all our energy was spent on [tackling that],” he added.

Dar credits PM for IMF ‘breakthrough’

Meanwhile, the finance minister credited PM Shehbaz for achieving the “breakthrough” with the IMF in Paris. Dar said he was reluctant to impose further Rs215bn in taxes in the revised budget and cut spending by Rs85bn but the prime minister had assured him of his support.

The finance minister said $1.1bn will be released for Pakistan within three to four days of the IMF board’s July meeting.

He said the stand-by arrangement was Pakistan’s 30th programme with the IMF.

Dar said some elements were spreading rumours about the country defaulting, adding that such people should be countered. “Pakistan is not a country to default … This country will never default. What is the reason for that? We were very active for a Plan B if God forbid the IMF [programme] did not work out,” he asserted.

He said the government had stabilised the economy and now was the time to focus towards acheiving growth. Dar also asserted that the government would take the country’s foreign reserves to $14-15bn by the end of its tenure.

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