We are responsible to commitments made with IMF, says Miftah

ISLAMABAD/WASHINGTON   -  Federal Minister for Finance and Revenue Miftah Ismail said Sunday that the International Monetary Fund (IMF) had agreed to send its mission to Pakistan in middle of May 2022 for continuation of Extended Fund Facility (EFF) programme.

Addressing a press conference in Washington, the federal minister said that he and his team had very good discussion with the fund, the World Bank and IFC. He said, when the IMF mission arrives in Pakistan, the government would try to have expedited staff level agreement with it.

When agreement is reached, we would look forward receive another tranche under the EFF, he said adding that the fund had also been requested, which it agreed, to extend this program for another year. However, he added these details would be sorted out when the fund mission reaches Pakistan. He said, the IMF had also been requested to enhance the funding available to Pakistan from $6 billion to a little more.

He said the cut in development expenditures would not have effect on ongoing projects saying that the previous government had allocated Rs900 billion for the program which was then cut to Rs700 billion while so far only Rs450 billion were utilised.

Miftah said the incumbent government would fulfill all sovereign commitments made by the previous governments. He said, the commitments were not done by Imran Khan as an individual but these were made by the government of Pakistan.

“We are responsible to commitments made with IMF, the loans taken by previous government and the China Pakistan Economic Corridor (CPEC) commitment. We are not stepping back from the commitment,” he resolved. He said, Pakistan had never defaulted in last 70 years and will not default in future too. He however added that this there had been excessive budget deficits, which led to increase in debts.

He said, the incumbent government would try its best to reduce debts by enhancing overall GDP, adding that if national income increases and debts were not increasing with that pace, it would definitely reduce debt burden. To a question, he said, the ‘Langar khanas’ were run by Salani group in previous government and it would be facilitated to continue the job. Likewise, he said, the social protection programmes, which he said were launched before the PTI government, would continue.

To a question, he said that Pakistan cannot afford subsidy on petroleum products as it was given to all people irrespective of their incomes. Secondly, the pocket of the national exchequer does not allow to continue this subsidy. To another question on budget, the minister assured that when the incumbent government leaves the office, it would leave reserves over the existing level of $10.8 billion, with more GDP growth over existing 4 percent and would definitely reduce inflation. He said that the coalition government had support of people and had majority in the parliament .

A Pakistan delegation led by Finance Minister Miftah Ismail held several meetings with the officials of the International Monetary Fund (IMF) and discussed pathways to complete seventh review of the IMF programme.

“The IMF expressed support to the Pakistan delegation,” says a press release issued by the Finance Division here on Sunday. The delegation laid out Pakistan government’s priorities and efforts to bring fiscal discipline while insulating the vulnerable from oil price volatility in the international markets.

The official announcement comes after Finance Minister Miftah Ismail met the World Bank and the IMF officials. The finance minister had also stated that the Fund “talked about removing the subsidy on fuel”.

According to officials, an IMF mission lead by Mission Chief Mr Nathan Porter will visit Pakistan next month to discuss the issues around subsidies on petrol and electricity announced by the outgoing government.

The delegation also met Mr Axel von Trotsenburg, Managing Director, Mr Hartwig Schafer, Vice President and other officials of the World Bank. Progress of on-going programme loans and projects as well as avenues for further assistance were discussed.

The Finance Minister thanked the Bank officials for the financial and technical support provided by the Bank throughout.

The press release said the Pakistani delegation held several meetings with IMF officials — including IMF Deputy Managing Director Antoinette Sayeh, Director Middle East and Central Asia Department Jihad Azour and Pakistan Mission Chief Nathan Porter — in which they discussed pathways to complete the seventh review.

In 2019, the IMF approved a $6 billion loan for Pakistan but concerns about the pace of IMF-mandated reforms delayed its disbursements. The sixth review was completed in February when the IMF also agreed to immediately release $1bn for Pakistan.

Reportedly, Pakistan and the International Monetary Fund (IMF) agreed, in principle, to extend the stalled bailout programme by up to one year and increase the loan size to $8 billion, giving markets the much-needed stability and a breathing space to the new government.

The understanding was reached between Finance Minister Dr Miftah Ismail and IMF Deputy Managing Director Antoinette Sayeh in Washington.