Ishaq Dar opposes idea of coalition govt entering fresh IMF programme

Finance Minister Ishaq Dar has opposed the idea of the incumbent government entering a fresh bailout programme and assured that he would not support the proposal if it is floated in the future.

“We should be clear that this programme, if it happens or not, will end on June 30. And this is an understanding with them on Pakistan,” said Dar during a press conference on Thursday where he was unveiling the economic survey.

The finance minister hoped that Pakistan is able to secure the ninth review, which has been pending since last year, before the conclusion of the programme so that their “hard work” and the public’s efforts to bear the brunt of the withdrawal of subsidies. He also added that Pakistan has done “more than its due work” and has been sharing “everything for seven months”.

“And after that, I believe it will be only fair that it should be the prerogative of whichever government comes [to enter an IMF programme] after winning the elections and it should not be bound. Currently to initiate a new programme will be totally undemocratic and unfair,” the senator said.

He assured the journalists that he will never support an idea where a “commitment is made for a post-election scenario”.

In the same presser, the financial czar also said that the coalition government had shared its budget numbers with the IMF, hoping to unlock the ninth review as there are "no issues in the numbers".

"Prime Minister [Shehbaz Sharif] agreed to give the numbers. I wasn't ready at first. They are the same numbers we'll share with you. There is nothing in the budget which is objectionable," Dar said.

The government is under enormous pressure from the IMF to tighten the purse strings to unlock another last tranche of a vital bailout package.

Under the IMF's terms, Pakistan had to do away with subsidies on energy and other sectors, allow the rupee to float against the US dollar, raise taxes and duties, and restrict imports.

Pakistan has to satisfy the Washington-based lender on three counts, starting with a budget to be presented on Friday, before its board will review whether to release at least some of the $2.5 billion still to be disbursed under a lending programme that will expire at the end of this month, an official said.

Esther Perez Ruiz, the IMF's resident representative for Pakistan, said on Thursday that there was only time for one last IMF board review before the scheduled end of the $6.5 billion Extended Fund Facility (EFF).

"As communicated to the authorities, there can be one remaining Board meeting under the current EFF at end-June," Ruiz said in an email response to Reuters.

"To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the FX market, pass an FY24 budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board," she added.

Pakistan's economy has been stricken by a balance-of-payments crisis as it attempts to service high levels of external debt, while months of political chaos have scared off potential foreign investment.

The grim data gives the cash-strapped government little room to introduce populist vote-attracting measures in Friday's budget ahead of an election due to be held in October.