Pakistan has Plan-B if IMF deal not revived: Ishaq Dar

Finance minister says country will make payments on time n For debt restructuring we will talk to bilateral partners but not with Paris Club n Govt has allocated funds for general elections in budget.

 

ISLAMABAD   -    Finance Minister Ishaq Dar Saturday ruled out the pos­sibility of debt restructuring with Paris Club and multilat­eral but said that Pakistan is considering discussions with bilateral partners regarding debt restructuring.

“As far as Paris Club resched­uling, we have no such plan on our menu. We will not go for rescheduling multilater­al debt. We will make the pay­ments on time and when they become due. I don’t think it is a dignified way to go and tell them that we cannot pay. That means you’re declaring your­self that you are not in a po­sition [to pay],” Finance Min­ister said while addressing a post-budget press confer­ence along with his economic team. He emphasised that the relief would not encompass “haircuts or write-offs”, and af­firmed that payments to multi­lateral creditors will be made promptly. However, he in­formed that the government is considering discussions with bilateral partners regarding debt restructuring for a longer term, which is not unusual. He has also clarified that there is no need for domestic debt re­structuring as it is not appro­priate time keeping in view higher interest rates.

The finance minister admit­ted that the government has ‘Plan B’ in case the loan pro­gramme with the Internation­al Monetary Fund (IMF) is not revived before completion of the programme by end June 2023. He once again clarified that Pakistan would not de­fault. Talking about ‘Plan B’, Ishaq Dar said that he could not share it in the public but it is about self-reliance and standing on your own feet. He came down hard on those who are predicting about the country's default and said they are basically behind these is­sues. They are partners in this crime, he added. He hoped that the IMF would release loan tranche for Pakistan as 9th re­view has completed. However, he said that there is no chance of a 9th review with the IMF as the programme would complete by the end of this month.

Talking about the pending amount of $800 million with Eti­salat for privatization of Pakistan Telecommunication Company Limited (PTCL), Ishaq Dar said that they are ready to give $264 million to the country. Howev­er, the government is trying to convince them to increase the amount. He admitted that Paki­stan’s case is very weak, as the government in 2006 had made mistakes in finalizing the agree­ment. He informed that the gov­ernment had transferred more than 3000 properties in favour of Etisalat except 32 or 33, which could not be transferred.

The finance minister clarified that general elections would be held on time and the government has allocated funds for it in the annual budget. “Our allies have the right to speak. They did not say anything unconstitutional,” he said, adding that if leaders of two parties had said so, the mat­ter would be discussed.

He informed that the first ob­jective of the government is to go back to achieve 2017 economic indicators. He said that the coun­try had faced a “deep and steep” economic vulnerability, which it had successfully overcome, re­sulting in a halt to “any further decline”. He said that the GDP growth target of 3.5 percent is easy to achieve. He informed that the government had realistic tar­gets in the budget. Increasing GDP growth would improve the economic situation and create job opportunities in the coun­try. He said the budget envisages several measures for the sectors of agriculture, Small and Me­dium Enterprises, Information Technology to achieve the objec­tive of economic growth.

The finance minister has also clarified that the government has neither taxed the packaged milk nor it withdrawn the taxes on import of edible oil. He was of the view that non-tax collection target of Rs2.9 trillion is realistic, as the government would gener­ate Rs2 trillion from two heads including profit of State Bank of Pakistan and petroleum levy. He further clarified that the govern­ment would not increase the pe­troleum levy from existing Rs50 per liter on petroleum products. He said that the tax collection target of Rs9.2 trillion from the Federal Board of Revenue (FBR) is achievable. He said that the government has taken new taxa­tion measures worth only Rs200 billion in the budget. Ishaq Dar said that the government is in process outsourcing airports of the country. He said that two committees are being constitut­ed in the FBR to address anoma­lies if any in the budget. He said these committees will take ef­fect from Monday. He also as­sured that due consideration will be given to the recommen­dations of the Senate as well as the standing committees on Fi­nance of the parliament. 

He underscored the signif­icance of the agriculture sec­tor in Pakistan’s economy, add­ing this sector has the potential to generate rapid revenue and dividends. Furthermore, he an­nounced an increase in the vol­ume of agricultural loans from Rs1800 billion to Rs2250 billion, with an allocation of Rs30 bil­lion earmarked for the installa­tion of 50,000 agricultural tube wells. Ishaq Dar also expressed the confidence that the PML-N led government would easily achieve 3.5 percent growth tar­get of Gross Domestic Product (GDP) set for the upcoming fis­cal year with effective and trans­parent utilisation of massive de­velopment funds it allocated for the Public Sector Development Programme (PSDP 2023-24).

“I believe if we rightly imple­mented the PSDP and invest­ed with complete transparen­cy, the GDP growth from 0.29% to 3.5% will be easily achiev­able. We have set a very modest target and I am very much sure if PSDP funds are invested judi­ciously, you will find perhaps the 3.5% growth at the lower side,” he said while addressing the post-budget news conference. He said the government allocat­ed a historic size of Rs1150 bil­lion in development funds un­der the PSDP, which was almost double the funds of Rs567 bil­lion utilized in 2022-23. In 2017-18, Ishaq Dar said he had pre­sented over Rs1 trillion PSDP budget that was a record-high at that time, while for the year 2023-24 a ‘new-high’ size of the development funds amounting to Rs1150 billion had been ear­marked to achieve the required goals of national development and put the economy on a con­sistent growth trajectory. He said the GDP growth target was not ‘unrealistic,’ adding the interna­tional financial and rating insti­tutions always remained conser­vative as the Asian Development Bank (ADB) and World Bank (WB) projected the growth at 2 per cent, International Monetary Fund (IMF) itself announced the target of 3.5 per cent, Bloomberg and Fitch rated at 4 per cent while Standard and Poor (S&P) calculated at 2-2.5 per cent.

“As per our professional cal­culation, it (3.5% GDP growth target) is doable by the grace of Allah Almighty,” the finance min­ister said confidently. Replying to a question on privatisation, he said the government was in the advanced stage of outsourcing the airports to improve facilities, adding companies from 12 coun­tries have shown interest to par­ticipate in the bidding process, expected to commence in July. 

Ishaq Dar said efforts were being made for getting an ex­tension in the GSP-Plus status and hoped it would be done.To another question, he said pop­ulation growth was alarming and needed to be addressed; otherwise, it could spoil the de­velopment efforts. He said the agenda related to population growth was also pending with the Council of Common Inter­ests (CCI) for consideration.

Answering a question, he said the defence budget of Rs1804 billion was 1.7 per cent of the GDP adding it was not an am­bitious one compared to neigh­bouring countries but a realistic one keeping in view the bud­get size. However, the minis­ter said, as far as bilateral debts were concerned there was al­ways room to negotiate but not for haircuts or write-offs. He said bilateral loans could be ne­gotiated for a long term and this was not unusual because of the Covid-19, flood catastrophe and other confronting challeng­es. “We will consider and talk to our bilateral partners but have no plan to go to multilateral de­velopment institutions request­ing them to reschedule our debt. The government will also not re­schedule the domestic loans,” the finance minister remarked.