Ruling allies regret KP govt’s bid to damage IMF loan.

 

 

ISLAMABAD    -   Pakistan’s deal with the International Mon­etary Fund (IMF) has once again come ‘un­der suspicion’ after two provinces Punjab and Khyber Pakhtunkhawa yesterday announced to backtrack from the al­ready signed Memoran­dum of Understanding (MoU) with the Centre for generating a reve­nue surplus during the current fiscal year.

However, Finance Minister Miftah Is­mail has said that there would be no issue with the IMF for approving the loan for Pakistan on coming Monday.

The government had taken tough decisions and arranged financing from the friendly coun­tries. The IMF deals with the government of Pakistan not with the provinces, he said.

Meanwhile, econo­mists and Ministry of Finance officials gave mixed response on the issue. They are of the view that Pakistan might receive the up­coming tranche from the IMF. However, Pa­kistan would have to present some alternate plan instead of provin­cial surplus budgets in the talks for next re­view of the loan pro­gramme.  The federal government had signed an MoU with the four provinces in July this year for generating a reve­nue surplus of Rs750 billion in the current fiscal year for curtailing the country’s budget deficit at 4.9 per cent of GDP. This was one of the pri­or actions of the IMF for approval of loan tranches of $1.17 billion. The IMF’s executive board would meet on Monday to approve much needed loan for Pakistan.

However, PTI’s leadership is claim­ing to withdraw from the agreement in a bid to break the IMF deal. For­mer information minister and senior official of PTI Fawad Chaudhry has recently said that deal with the IMF would collapse if Punjab and Khyber Pakhtunkhawa backtrack from the al­ready signed MoU with the Centre for generating a revenue surplus. Simi­larly, KP’s Finance Minister Taimur Jhagra in a letter to the federal gov­ernment has clarified that the prov­ince could not generate surplus bud­get after the floods in different parts of the province. “It will not break the deal with the IMF. However, it would be an embarrassing situation for the country,” said a senior economist, who worked with the ministry of fi­nance, wishing not to be named. The government would easily secure the upcoming tranche of $1.17 billion in next week. For the next review, the government might convince the IMF that provinces could not gener­ate massive surplus budget of Rs750 billion following the unprecedent­ed floods in the county. “How can provinces generate surplus budget as there will be a need of exceptional funding for rehabilitation of flood af­fected areas,” he explained.

Another senior economist, Dr Far­rukh Saleem informed The Nation that provinces normally do not re­cord surplus budget by the end of fis­cal year. The incumbent government had committed with the IMF to re­cord surplus primary budget with the help of provincial surplus. “It could break the deal with the IMF,” he and said that things would be clari­fied in next few days.

Finance Minister Miftah Ismail on Friday informed the media that the IMF executive board would meet on Monday to approve the loan tranches for Pakistan worth $1.17 billion. He said that Pakistan had already com­pleted all prior actions in this regard.

Meanwhile, the ruling coalition al­lies have said that at a time when the whole nation is facing a disas­trous situation due to unprecedented flood in the country, the Khyber Pa­khtunkhwa government, playing pol­itics, has refused to implement the terms of the agreement with the IMF.

In a joint statement issued here on Friday, the ruling allies said that the KP Finance Minister’s letter to Fed­eral Minister for Finance Miftah Is­mail is a ploy to plunge Pakistan into a flood of economic crisis.