IMF team expected next month for new loan talks

Published April 21, 2024
Finance Minister Muhammad Aura­ngzeb meets representatives from Fitch Ratings in Washington DC on April 20. — PID
Finance Minister Muhammad Aura­ngzeb meets representatives from Fitch Ratings in Washington DC on April 20. — PID

WASHINGTON: Finance Minister Muhammad Aura­ngzeb revealed on Saturday that an IMF team is anticipated to visit Pakistan by mid-May to negotiate a new long-term process, aiming to secure a staff-level agreement by mid-July.

Speaking to US-Pakistani media at the conclusion of his week-long visit, the minister mentioned the Fund’s intention to expedite the process. “The contours of the new programme will shape up later. We will start getting into granularity of the programme by mid-May,” he added.

Addressing journalists at the Pakistan Embassy, Mr Aurangzeb expressed the hope that the IMF’s board of governors would convene to consider the last tranche of the current programme by the end of this month, with the final installment released shortly thereafter.

Pakistan is seeking a $6-8 billion new loan package from the end. In earlier statements, he said Pakistan would prefer a long-term, preferably a three-year programme.

Aura­ngzeb says debts can be repaid only after CPEC-II

But when asked at Satur­day’s briefing, Mr Aurangzeb said he would not speculate the size or the duration of the programme yet.

Second phase of CPEC

Earlier, Mr Aurangzeb informed a Chinese television audience that Pakistan can repay its debt to China only after completing the second phase of CPEC.

The minister’s candid remarks followed discussions with key financial institutions like the IMF and World Bank, alongside senior US officials in Washington this week.

Explaining his stance on this sensitive issue, Mr Aurangzeb said: “CPEC was a champion project for Pakistan, and a lot of infrastructure was created during its first phase. Now, what’s supposed to happen was for us to go into CPEC Phase 2, which was and remains the way we monetise that infrastructure because that’s where the special economic zones come in.”

The minister elabora­t­­ed that through these special economic zones, Pak­i­­­s­tan was to attract further Chinese investment.

Emphasising the necessity of completing this process, the minister stated: “There’s a lot of discussion about how you are going to repay the debt, that’s how it was supposed to happen.”

He expressed gratitude to the Chinese government and banks for their assistance in debt servicing, noting, “But ultimately, these debts have to be paid. And that’s only going to be there when we get phase 2 going in real earnestness.”

In an earlier meeting with Chinese Finance Minister Lan Fo’an in Washington, Mr Aurang­zeb commended China’s invaluable contribution to Pakistan’s development through initiatives like CPEC.

He discussed Phase-I’s focus on infrastructure-building and Phase-II’s emphasis on special economic zones and relocation of Chinese private-owned companies, as per a statement issued by his office.

Mr Aurangzeb expres­sed gratitude for Chinese support, particularly its SAFE deposits. He informed his Chinese counterpart about Pakistan’s broader IMF programme and its interest in accessing the Chinese bond market with a Panda Bond.

On Saturday, the finance minister met representatives from S&P Global and Fitch Ratings, sharing the country’s positive indicators under the IMF’s SBA.

He also highlighted the ongoing reforms in taxation, energy, and privatisation across short-, medium-, and long-term horizons.

Additionally, the minister discussed the alignment of the World Bank’s agenda with government priorities, including climate change and digitalisation.

He mentioned potential Saudi investments and addressed concerns from rating agencies regarding the external side, inflation, primary balance, and interest rates.

Published in Dawn, April 21st, 2024

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