Pakistan

Technical-level talks with IMF are over: Ishaq Dar

  • Finance minister holds back from giving timeline on when deal will be inked
Published March 30, 2023

Finance Minister Ishaq Dar on Thursday said “all technical-level discussions with the International Monetary Fund (IMF)” are over. However, the minister refrained from giving a timeline on when the deal will be inked.

During a Question/Answer session at the Senate, Dar said once again that the IMF wants commitments made by friendly countries to materialise.

He reiterated that the country would not default on its payment obligations.

“There is no question of default, Pakistan will manage its responsibilities, and will make every payment on time.

“IMF or no IMF, we need to jointly run the country, and there should be no politics on the economy,” he added.

His comments come a day after Minister of State for Finance Dr Aisha Ghaus-Pasha said the staff-level agreement on the 9th review was taking time because the IMF wants to independently verify commitments from friendly countries i.e. Saudi Arabia and the United Arab Emirates.

Pakistan is reeling from one of its worst economic crises in history. The South Asian country has been faced with a barrage of woes with a perceived default risk and a downgrade by international rating agencies reflecting the state of the economy that has also had to bear major political turmoil and frequent change in key leadership.

The IMF funding is critical for Pakistan to unlock other external financing avenues, and the two have been negotiating since early February to resume $1.1 billion in funding held since November, part of the bailout agreed upon in 2019.

Chinese loan rollover of $2bn to Pakistan in process: source

On the state of Pakistan's economy

Meanwhile, at the Senate on Thursday, Dar admitted that “there is very high inflation in the country,” adding that in the last five years, Pakistan’s economy dropped from 24th in 2017 to 47th position in 2022.

“Our current condition is due to the incompetence and flawed policies adopted in the last five years. There is no quick fix,” he said.

The minister said the incumbent government has not deferred any international obligation. “We have been making all the payments. However, Pakistan is paying a huge cost after the previous government last year reversed its sovereign commitments."

Dar said the country’s foreign exchange reserves have been improving in the last five weeks. “We are trying our best. The government's target is to take the country’s national reserves to $13 billion by June. I am sure it is possible,” he said.

IMF’s ingenious approach the only hurdle to bailout

Dar admitted that “no business can run” in a high-interest rate environment, which currently stands at 20%. He said that the monetary policy is completely independent and “totally under the control of the central bank (SBP)”.

'Conditions not healthy for export sector'

Earlier, Federal Minister for Commerce, Syed Naveed Qamar, while answering a query pertaining to the export sector, said that '"unfortunately present conditions are not healthy."

“As we are moving into the IMF programme, one of their conditionality was that the government should not give any subsidy to its industry including the export sector,” he said.

Qamar said that in the past the government was subsidising two sectors, which lead to a substantial increase in the country’s exports over the previous years.

“Post-Ukraine conflict, we are witnessing a global recession. Moreover, the government withdrew its subsidies on gas and electricity. Due to budgetary constraints, we are unable to give DLTL (Drawback of Local Taxes and Levies) subsidies.”

“We are seeing the impact of this and it will be seen next year as well. Withdrawal of subsidies will have a negative effect on exports.”

On a query raised by Pakistan Tehreek-e-Insaf (PTI) Senator Mohsin Aziz regarding expected growth in exports in FY22-23, Qamar admitted that “it (exports) will not go up but perhaps will go down.”

Comments

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Musalman Punda Mar 30, 2023 01:56pm
It's time for Ishaq Dar to be booted out.
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Builder Mar 30, 2023 03:41pm
Yes, this incompetent guy should resign for his own dignity.
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John Mar 30, 2023 04:51pm
After "Operation IMF failure" his sponsors are now working on neutralizing the supreme court to save their skins...but 220 million people will not tolerate messing with the constitution and supreme court of Pakistan! Enough is enough!
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AmirSh Mar 30, 2023 04:54pm
Another failed experiment by most experienced ones. Financial Czar-Ishaq dar. Please go!
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Haroon Mar 30, 2023 08:52pm
IMF deal is not happening anytime soon. Expect the markets to keep tanking.
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KhanRA Mar 31, 2023 02:21am
So where is the money? Dar promised us so many times that the money would be dispersed soon. Does anyone take him seriously anymore? PML-N should take responsible and show the courage to dismiss him. Instead they play rishtedar politics with the national economy. The Sharif clan must be made aware that this country isn’t their personal fiefdom, and they are not our royal family.
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bonce richard Mar 31, 2023 03:45am
@AmirSh, Why did he leave still he will suck more blood because he belongs to Punjab.
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Chawla.i Mar 31, 2023 04:44am
Enough is enough....send this old convicted person to jail and send high level eligible people to discuss with friendly countries to understand and brief them fr a long-term solution and curtail our fiscal policy and restrict unnecessary imports even ban imported vehicles (except locally manufactured or assembled all items) as until unless our trade balance is almost at par we can't afford luxury products and atleast ask all parties to present Thier economic policy with a open dialogue fr public than go for elections ...a humble Pakistani suggestion . best wishes and gdluck Pakistan
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Tariq Wajid Mar 31, 2023 09:39am
Why can we work on fast track with industries capable of exporting without subsidies but some governmental support
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