KARACHI Finance Secretary Shaukat Tarin painted a grim picture of Pakistans financial crisis while outlining a government plan to resuscitate the beleagured economy during a press conference on Thursday.
Tarin, the recently appointed finance chief, told reporters that over the next thirty days, $3-5 billion needed to be injected into Pakistans financial system. He also stated that assistance from the International Monetary Fund (IMF) was being held as an option of last resort despite the funds unique capacity to provide large amounts of liquidity on an urgent basis.
Earlier, the IMF revealed that Pakistani authorities have requested discussions... on an economic program supported by financial assistance. This was denied by Tarin who told reporters that the government had not yet made a formal request for funds from the global lender. Instead, Pakistan was still hoping for an injection of liquidity from friendly and allied nations.
IMF assistance, if provided, would be very unpopular in Pakistan where the lender is viewed negatively by the public due to its interventionist lending model. Tarin revealed that if funds were taken from the IMF, the government would have to drastically cut borrowing from the State Bank and reduce government spending.
When asked by reporters about possible aid from the loosely allied Friends of Pakistan group - the result of a diplomatic initiative by the government - Tarin was hesitant about assuring the public of their support in the short-term. It is a timing issue, he said. He continued we shall have to see how much they can help us and when.
During a recent visit to Pakistan, the top US diplomat for South Asia, Richard Boucher, warned that any aid from the group would not (be) a cash advance and may come with caveats.
Tarin told reporters that a deferred payment facility for petroleum bought from Saudi Arabia may still be on the cards. The facility, which would allow Pakistan to pay later for fuel bought now, could go a long way towards easing the burden on dwindling foreign reserves.
The finance secretary also briefed reporters on his vision for development within Pakistans federal economic structures. The planning commission must become the think-tank of our economy... It must bring all stakeholders to the table, he stated.
Pakistans economy has been crippled by fuel and food inflation and a domestic insurgency which has panicked foreign investors. This combination of factors has triggered a 25 per cent devaluation of the rupee since the start of the year, a crash within the stock markets and a looming foreign debt crisis.