Pakistan asks US to help resuscitate stalled IMF programme

ISLAMABAD: Pakistan Wednesday asked the US to play a role in reviving the stalled International Monetary Fund (IMF) programme, though Washington seems more interested to know what Islamabad’s strategy was to cope with economic challenges in case of no funding from the Fund.

Top official sources said the IMF raised different kinds of objections and asked Islamabad to bring changes in the budget for 2023-24 in order to align the allocations with the IMF requirements. But Islamabad was asking the IMF staff to accomplish the pending 9th Review as a standalone for moving towards the release of $1.2 billion tranche.

However, all hopes were diminishing except for Prime Minister Shehbaz Sharif’s request for a meeting with the IMF managing director (MD) for a breakthrough. While there are no chances of any breakthrough, but Islamabad seems ready to make a last-ditch effort to revive the IMF programme.

US Ambassador Donald Blome on Wednesday called on Federal Minister for Finance Ishaq Dar in his office at the Q-Block (Ministry of Finance). When inquired by the US ambassador from the Pakistani team about the strategy of the country in case the IMF programme does not materialise, Ishaq Dar categorically replied that “Pakistan would remain afloat even without the IMF programme”.

The minister said they have implemented all prior actions of the IMF, including securing confirmation on external financing requirements of $4 billion and also achieved a current account surplus in the last few months. He said Pakistan implemented tough conditions for which the government had to bear huge political costs. Sources said the US ambassador gave a cold shoulder and preferred not to commit any strong support.

Sources said the finance minister had made the same request to a UK minister in Tuesday’s virtual meeting for reviving the IMF programme; the UK minister asked Islamabad to bridge the trust deficit with the lender of last resort.

According to the official statement of the Ministry of Finance, US Ambassador Donald Blome called on Federal Minister for Finance and Revenue Senator Ishaq Dar. The latter welcomed the guest and valued the deep-rooted historic and durable bilateral relations with the United States on economic and trade fronts. The finance minister also shared the economic policies and priorities of the government to address the challenging economic environment and set the economy on the path to stability and growth. The two sides also exchanged views about areas of common interest and how the existing bilateral relations between the two countries could be enhanced further.

The finance minister informed the US ambassador about the government’s budgetary measures to reduce the fiscal gap in order to meet its national as well as international financial obligations. He also informed the envoy about the progress made on the ongoing talks with the IMF and stated that the government was committed to completing the programme.

Donald Blome expressed confidence in the policies and programmes of the government for economic sustainability and the socio-economic uplift of the masses. He extended his support to further promote bilateral economic, investment and trade relations between both countries. Minister Ishaq Dar thanked the US ambassador and reiterated the desire of the government to further deepen bilateral trade and investment ties with the US.

Meanwhile, owing to the government’s inability to get the IMF programme revived, Pakistan’s ability to secure foreign loans from multilateral and bilateral creditors has shrunk by over 62.3 per cent in the current financial year.

Islamabad could only secure $8.6 billion in the shape of loans and grants in the first 11 months (July-May) period against an envisaged target of $22.8 billion for the whole financial year 2022-23.

Now the last month (June 2023) is left and Pakistan would hardly cross the $9 billion mark in the outgoing financial year ending on June 30, 2023. The country generated $13.5 billion in the same period of the last financial year.

According to official figures about total foreign loans and grants, the Kingdom of Saudi Arabia clinched the first position by providing oil facility to the tune of $1.082 billion in the first 11 months of the current fiscal year against the envisaged target of $800 million for the whole financial year.

The multilateral creditors disbursed loans of $4.45 billion in the first 11 months, out of which almost 50pc loans amounting to $2.03 billion were provided by the Asian Development Bank. The World Bank’s IDA loan disbursement stood at $1.3 billion, while IBRD funding stood at $170.32 million. The Asian Infrastructure Investment Bank (AIIB) disbursed $555.96 million.

Ironically, the Islamic Development Bank’s disbursement in the shape of short-term loans decreased significantly as it stood at $161 million in the first 11 months out of a total target of $1.2 billion for the outgoing financial year. The disbursement from ECO Trade Bank stood at $64 million, IFAD $43.9 million, ISDB $16.8 million, EIB $13.37 million and MTDF $1.47 million. There was no disbursement of loans or grants from the EU, OFID and UNICEF in the current fiscal year.

From bilateral creditors, Pakistan received $1.35 billion in the first eleven months of the current fiscal year out of which $1.08 billion was received from KSA through an oil facility, China $128 million, Japan $34.8 million, France $32.8 million, USA $30.23 million, Korea $22.59 million, Germany $7.32 million, Italy $5.45 million, Belgium $5.35 million and Oman $1.89 million. Denmark, Kuwait, Saudi Arabia and UK did not release any project loans during the current fiscal year.

The IMF, so far, released $1.16 billion in the current fiscal year. The loans from commercial banks decreased substantially as they stood at $900 million in the first 11 months of the current fiscal year against the total envisaged amount of $7.47 billion for the outgoing financial year. Through Naya Pakistan Certificate, the government could fetch $742.9 million in the first 11 months of the current fiscal year. The government could not launch international bonds in the current fiscal year so far against its plan of launching those of around $2 billion.