ISLAMABAD - Pakistan on Saturday rejected the United States’ claim that Islamabad is borrowing from International Monetary Fund (IMF) to repay Chinese loans.

He told a press conference on Saturday that an IMF delegation will visit the country from November 7 to finalise terms and conditions for a three years bailout programme.

But he declared that government would not accept any loan programme with harsh and unacceptable conditions.

Talking about Washington’s claim, he remarked, “US claim is 100 percent wrong.” The IMF programme has nothing to do with Chinese loans, as Pakistan would have to repay only $300 million at average in next three years to China, he added.

The United States has recently said that it will examine closely Pakistan request for a loan from the IMF. It said that part of the reason that Pakistan found itself in this situation is Chinese debt.

Asad said that Chinese loans are long term and given on attractive lower interest rates to Pakistan. He further said that US is the largest contributor of resources for the IMF and has 16.4 percent of the votes on the Fund’s board. However, Pakistan is hopeful to get loan programme according to the charter of IMF.

Other steps to keep ship floating

Asad said that government is also working on stopgap arrangement, as finalisation of IMF programme would take couple of months. He vowed to enhance the exports to come out of the cycle of loans.

The government has taken measures to enhance exports including not increasing gas tariff and also plan to reduce power tariff for exports oriented sectors, the minister said. He also said that government would release the pending exports refunds of the exporters, which are currently around Rs100 to Rs150 billion.

The finance minister admitted that IMF programme would put negative impact on the people, as the government would have to take difficult decisions to bring country out of the economic crisis. The government had consulted with friendly countries before going into IMF programme.

Asad also dispelled the impression created by a statement of Information Minister Fawad Chaudhry that Saudi Arabia and United Arab of Emirates (UAE) had set tough conditions for financial assistance.

“It is totally wrong. No conditions were set by Saudi Arabia and UAE for financial assistance. Negotiations are still underway,” he added.

Also, negotiations with Saudi Arabia for purchasing oil on deferred payment are still underway, the minister revealed.

On a question, he informed that Pakistan would soon sign avoidance of double taxation treaty with Switzerland on the basis of the latest Organisation for Economic Cooperation and Development (OECD) model.

People must have drawn the money from Swiss accounts, which were under spotlight in last four years, he informed.

A burden of past

The minister said they were compelled to approach the IMF due to wrong economic policies of the past government that led to a huge current account deficit. He said he had never claimed that the government would not approach the Fund.

“At present, the total shortfall of the country’s foreign exchange reserves is around $12 billion, which cannot be bridged through the IMF loan. The government will also utilise other sources for the purpose,” he said.

Giving further details, Asad said the current account deficit was around $3 billion each month in last three months (April to June) of previous fiscal year.

“The foreign exchange reserves had fallen to only $8.4 billion in September 2018 from highest $18.9 billion of September 2016. Therefore, the bailout was unavoidable,” he explained.

The minister said during his meetings with the IMF officials in Bali, Indonesia, the two sides expressed the desire that it might be the last bailout package for Pakistan.

“We have sought the package only to get relief for the time being and run the country’s economic system smoothly,” he said.

“Meanwhile, we will improve our capacity by gradually reducing trade deficit, increasing foreign remittances, improving tax revenues, and introducing other revenue generation measures in a bid to avoid the IMF packages in future”.

Asad Umar said that Pakistan had so far taken 18 IMF programmes since its independence. Eleven of them were taken by the democratic governments and seven in military regime.

The PML-N had taken two IMF programmes, in 1997 and 2013. The PPP had approached IMF 9 times, he said.

The minister held the previous PML-N government responsible for the current economic situation. The next government however would not have to approach IMF as PTI government would address the economic issues of the country within its five years tenure, he assured.

Rupee depreciation

Asad disclosed that State Bank of Pakistan (SBP) had given instructions to the banks for recent rupee depreciation that resulted in an all-time high value of dollar of Rs138 in open market last week.

He said that ministry of finance would not intervene in the market to control the rupee value, but he claimed that their policy of currency rate determination by the open market had nothing to do with IMF programme.

“The rupee had depreciated by 26 percent and interest rate enhanced by 2.75 percent during December 2017 to October 2018 when there was no IMF programme in the country,” he pointed out.

Rupee has to depreciate when government is not taking right decisions, foreign exchange reserves are declining and budget deficit is widening, he explained.

Asad was all praise for his predecessor as the incumbent minister claimed that PML-N had no other option apart from approaching IMF. He added “It was not Ishaq Dar’s fault to seek bailout”.