WASHINGTON/ISLAMABAD - Pakistan has initiated discussions with the International Monetary Fund (IMF) over a new multi-billion dollar loan agreement to support its economic reform program, Federal Minister for Finance and Revenue, Muhammad Aurangzeb said.
With the final $1.1 billion tranche of Standby Arrangement (SBA) likely to be approved later this month, Pakistan has begun negotiations for a new multiyear IMF loan program worth “billions” of dollars, the minister said in an interview with Agence France Presse (AFP).
“The market confidence, the market sentiment is in much, much better shape this fiscal year,” he said adding “it’s really for that purpose that, during the course of this week, we have initiated the discussion with the Fund to get into a larger and an extended program,” he added.
During his visit to Washington, Aurangzeb will also attend the spring meetings organized by the IMF and World Bank, which kick off in earnest Tuesday, with two clear objectives: to help countries combat climate change, and to assist the world’s most indebted nations.
The meetings -- which bring central bankers together with finance and development ministers, academics, and representatives from the private sector and civil society to discuss the state of the global economy -- will kick off with the IMF’s publication of its updated World Economic Outlook. “I do think that we will at least be requesting for a three year program,” Aurangzeb said. “Because that’s what we need, as I see it, to help execute the structural reform agenda.” “By the time we get to the second or third week of May, I do think we’ll start getting into the contours of that discussion,” he added. On trading relationship with United States and China, the minister elaborated that US was Pakistan’s largest trading partner, and it has always supported it and helped in terms of the investments. “So that is always going to be a very, very critical relationship for Pakistan.” On the other side, he added, a lot of investment, especially in infrastructure, came through China Pakistan Economic Corridor (CPEC),” he said, referring to the roughly 1,860-mile long corridor. The AFP report says that as part of the structural reform program agreed to by the previous government, Pakistan is in the middle of a privatization drive to sell off its poorly- performing state-owned enterprises (SOEs). The first SOE on the list is Pakistan International Airlines (PIA).
“We will get to know in the next month or so with respect to interest from prospective bidders,” Aurangzeb said adding the government wanted to go through with that privatization and take it through the finishing line by the end of June.
If the PIA privatization goes well for the government, other companies could soon follow. “We’re creating an entire pipeline,” he said, adding: “Over the next couple of years we want to really accelerate that.”
Also, Federal Minister for Finance and Revenue Muhammad Aurangzeb, who is leading a Pakistan delegation in the IMF and World Bank-2024 Spring Meetings in Washington DC, on Tuesday highlighted the country’s roadmap to cope with the confronted challenges and put economy on sustainable growth trajectory. In an interactive session with Atlantic Council’s Geo-Economics Center and South Asia Center titled “Opportunities and Challenges for the Pakistani Economy through 2024 and Beyond”, he outlined Pakistan’s key measures to achieve economic stabilization by increasing tax-to-GDP ratio, undertaking end-to-end digitalization of FBR, reforming State-Owned Enterprises (SOEs), boosting exports, increasing remittances, improving business environment and attracting foreign direct investments.
Sharing Pakistan’s current economic landscape, he said the country had entered in a much better shape this year than the beginning of the last year, adding it had to do a lot with the ninemonth SBA programme which in turn “ushered in a macroeconomic stability for the country.” He said the country’s overall GDP was moving in the right direction, although the headline number was not that significant, however different sectors were performing well. He said, agriculture witnessed 5 percent growth owing to bumper crops; services sector was moving quite well and inflation had come down from the peak of 37-38 percent to closer to 20-22 percent while the exchange rate was stable.
“So all of this has moved us in the right direction, now we will take it forward from here [for which] we need, in the first instance, permanence in the macroeconomic stability,” adding the government had initiated discussion with the International Monetary Fund (IMF) on the larger and extended programme that would help put economy on sustainable growth path .
The finance minister was of the view that the ”timely decisions and timely executions” were the key aspects to run even a smallest institution or the largest country on the planet . . .” He said Pakistan does not need too many policy prescriptions as “we have known what and why, not for years but the decades.” We know to have focus on tax-aspect, tax-to-GDP, investment- to-GDP, increasing exports, getting the circular debt in order and accelerating the privatization agenda. ”These are some of things that my predecessors had been signing with the Fund. It is time for us to start moving with execution of some of these aspects,” he said. Aurangzeb said Pakistan was looking for a larger and extended programme as it would need two-three year time period to go through the structural reforms programme.
The finance minister termed discussions with IMF mission that visited Pakistan last month for the 2nd and final review of the SBA programme ‘very constructive and positive.’