Pakistan Finance Minister Ishaq Dar blames geopolitics for stalled IMF loan; vows against default

Mr. Dar said that no reason had been given by the IMF for the “unnecessary delay” behind the ninth review, which has been pending since November

June 16, 2023 03:39 pm | Updated 03:39 pm IST - Islamabad

Pakistan’s Finance Minister Ishaq Dar leaves after a post-budget press briefing for FY 2023-24 in Islamabad, Pakistan on June 10, 2023.

Pakistan’s Finance Minister Ishaq Dar leaves after a post-budget press briefing for FY 2023-24 in Islamabad, Pakistan on June 10, 2023. | Photo Credit: Reuters

Pakistan’s Finance Minister Ishaq Dar has blamed geopolitics for a stalled International Monetary Fund (IMF) loan package and said that global institutions wanted the cash-strapped country to default like Sri Lanka and then take part in the negotiations.

Mr. Dar said that no reason had been given by the IMF for the “unnecessary delay” behind the ninth review, which has been pending since November. He also reiterated that the country would meet its obligations with or without the IMF bailout package. “IMF or no IMF, Pakistan will not default,” he was quoted as saying by the Dawn newspaper.

Also Read | Pakistan to seek U.S. help for revival of stalled IMF loan programme

Mr. Dar, however, said that the negotiations with the Washington-based global lender were ongoing and the ninth review would be completed by this month. IMF signed a deal in 2019 to provide $6 billion to Pakistan on fulfilment of certain conditions. The plan was derailed several times and the full reimbursement is still pending due to the IMF’s insistence that Pakistan should complete all formalities.

Mr. Dar said on June 15 that while demands for arranging guarantees for $3 billion from friendly bilateral partners had been met as committed earlier, the remaining $3 billion have been assured by the World Bank and the Asian Development Bank.

Also Read | China rolls over $2 billion loan to Pakistan as it struggles with external liquidity

The Minister said China realised the politics behind the unnecessary delay and its commercial banks agreed to roll out loans to Pakistan. He said that the assurance of $3 billion was given by Saudi Arabia and the UAE to the IMF, besides $400 million from the World Bank RISE project and $250 million from the Asian Infrastructure Investment Bank.

His remarks came after the IMF raised several issues in Pakistan’s budget for the fiscal year 2023-24, calling it a “missed opportunity”. The government unveiled an ₹14.4 trillion budget for 2023-24 in the National Assembly last week as it battled to fend off a looming default due to shrinking foreign reserves.

Also Read | UAE approves additional $1 billion funding to Pakistan: Finance Minister Ishaq Dar

Mr. Dar said IMF’s reservations on the current budget might be valid, but the IT, Agriculture and Small and Medium Enterprise (SME) sectors were the “drivers of growth” and exemptions given to these sectors were essential for ensuring the country’s economic growth, which currently stands at 0.29%.

“How can we achieve growth without facilitating certain areas of the economy?” he asked.

He said a return of $2.5 billion was expected from the IT industry this year, which would increase to $4.5 billion next year.

Mr. Dar also added that exemptions have been given by keeping in view the potential growth of the IT industry. Pakistan’s economy has been in free fall for the last many years, bringing unbridled pressure in the form of unchecked inflation and making it almost impossible for a vast number of people to make ends meet.

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