Finance Minister Ishaq Dar on Friday said he was not concerned whether the International Monetary Fund’s (IMF) team arrived or not for the ninth review of Pakistan’s $7bn Extended Fund Facility (EFF), saying that he had to look at the country’s interest first.
Appearing on Geo News show ‘Aaj Shahzeb Khanzada Kay Sath’, the finance minister was questioned about the delayed arrival of the IMF team to which he said: “I don’t care if they come. I don’t have to plead before them. I have to look at Pakistan’s matters.”
He added that the IMF team was “most welcome” to come and the government was dealing with it on a weekly basis.
“Our ninth review is totally in order. Everything is in order and under normal circumstances … I have reassured them that our ninth review is in order and you should come and give Pakistan the $500 million funds,” Dar said.
He said the IMF could “not dictate” the government. “If they don’t come then we will manage — no problem,” Dar added.
Pushed back on the implications of his approach, the finance minister acknowledged that he agreed with the potential fallout of a breakdown in IMF talks and said that was why he was talking to the body for the country’s sake.
“I know how to complete the [IMF] programme,” the finance minister maintained, stressing that the government would complete the current programme as well.
Dar said that in his talks with the IMF, he told the Fund that it should strike deals keeping in mind that the government could not further burden the people. Dar said he had told the IMF that it was “behaving abnormally” in regard to dealing with Pakistan.
“I have never taken dictation and never will from these institutions, I have to look after Pakistan’s interests,” the finance minister reiterated.
Regarding the general level of Pakistan’s foreign reserves and the risk of default, Dar said the government had made arrangements for all its liabilities for the fiscal year and would make all payments.
He also said that the government was currently in talks with an allied country for a deposit of $3bn, adding that there was a “positive understanding” present and Pakistan would definitely receive the funds.
“This is a matter of two weeks [for the amount to arrive],” he added.
Dar also rebuked former finance minister Miftah Ismail for his recent comments about the country’s risk of default and said he should be questioned about his six-month performance and where he left the level of foreign reserves.
“He is a nonentity for me on this subject,” Dar said.
Govt struggles for $1.18bn tranche
Amid time running out, the IMF is still analysing Pakistan’s fiscal position particularly the flood-related expenditures that it viewed had changed the macroeconomic assumptions of the fund programme.
The “IMF understands that the floods have changed the macroeconomic assumptions on which the programme was designed; therefore detailed analysis is being conducted by their team using the data provided”, the Ministry of Finance had said in response to a media query on the delay in the ninth review.
The two sides had been virtually engaged for more than a month now in attempts to conclude the ninth review in November so that the next tranche of about $1.18 billion could be approved by the IMF’s executive board and disbursed before Christman and new year holidays. The policy level discussions are yet to be finalised although the finance ministry had said the “IMF team is expected to visit Islamabad soon for completion of the 9th review”.
Under the normal mechanism, the fund staff mission has to reach an agreement with authorities on programme implementation and then required at least a fortnight for the board members to hold a meeting based on staff agreement. A further delay would mean the unavailability of the IMF executive board until the first week of January.
Pakistan’s foreign exchange reserves in the meanwhile are critically low and the central bank authorities have been rationing dollar releases even for essential imports like crude and petroleum products.
The authorities shared last month a revised fiscal framework with the fund showing close to Rs1tr in fiscal slippages during the current fiscal year, including over Rs900bn worth of higher than budgeted interest payments besides revenue shortcomings going forward.
While Pakistan would be seeking a few waivers on slippages from the fund programme because of floods, the fund staff had been examining the government’s position on flood-related expenditure on budget and related financing flows from multilateral and bilateral lenders and donors. Fund sources also suggest that two sides were remotely engaged “over policies to reprioritise and better target support toward humanitarian and rehabilitation needs, while also accelerating reform efforts to preserve macroeconomic and fiscal sustainability, including with continuing financial support from multilateral and bilateral partners”.
The policy level talks were originally due in the last week of October, rescheduled to Nov 3 and then kept on delaying following gaps in estimates by two sides. The authorities had been struggling to schedule formal talks on the overdue ninth review of the $7bn EFF amid a lack of clarity on flood-related financial requirements for the current fiscal year and a declining revenue stream following import control as expenditures already go south.