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LAHORE: Finance Minister Ishaq Dar and Governor State Bank of Pakistan (SBP) Jameel Ahmad on Friday inked a Letter of Intent (LoI) for a nine-month $3 billion Stand-by Arrangement (SBA) with the International Monetary Fund (IMF) here at the Governor’s House.

Prime Minister Shehbaz Sharif, Punjab Governor Muhammad Baligh-ur-Rehman, and Minister for Information and Broadcasting Marriyum Aurangzeb and were also present on the occasion.

The IMF had issued the LoI after reaching a staff-level agreement for loan programme with Pakistan under the memorandum of economic and fiscal policies.

Pakistan to now turn towards growth, says Dar after IMF deal

Under this agreement, the IMF would give US three billion dollars to Pakistan within a period of nine months and the first tranche of the $ 1.1 billion amount would be released to Pakistan after the IMF board meeting in mid July.

The scanned copies of LoI would be sent to IMF Headquarters in Washington. It may be noted that the Prime Minister Shehbaz Sharif held two meetings with IMF managing director in Paris and also made telephonic call to her to secure the deal.

This was the 23rd programme which had been signed with the IMF and except 2013-16 programme, Pakistan could not complete any of its IMF programmes, sources said.

After the signing ceremony, Finance Minister Ishaq Dar while appreciating the role of the PM in breakthrough with the IMF at Paris hoped that Pakistan’s foreign reserves will reach to $ 14-15 billion by the end of the incumbent government’s tenure.

Addressing at a news conference accompanied by Prime Minister Shehbaz Sharif, Minister for Information and Broadcasting Marriyum Aurangzeb, Ishaq Dar said that the government convinced the IMF that it would be very unfair if $ 2.5 billion balance amount of the concluding programme was not given to Pakistan.

Responding to a query, he said that he was reluctant to impose taxes of Rs 215 billion in the budget 2023-24 to meet the IMF conditions but the prime minister assured him that if the programme was not finalized then we could reverse taxes.

Terming the agreement with International Monetary Fund a big success, Ishaq Dar categorically rejected the rumors of default of Pakistan and expressed his resolve to gain Pakistan’s position again on 24th economic position. He said only mines potential of the country is six thousand billion dollars. Pakistan possesses substantial assets amounting to $ 3000 billion,” he said, adding: “Our objective was to restore Pakistan’s economy and take it to the position held in 2017 and beyond.”

He said that a future roadmap had been designed for economic revival and special initiatives were being taken in agriculture, IT, mining and other sectors.

He said that significant progress had already been made and Pakistan paid $ 5 billion in commercial bank loans, contributing to a reduction of $ 4 billion in external debt.

Dar said that previous government had taken records debts and increased the difficulties of Pakistan. He also acknowledged the role of State Bank of Pakistan whose fiscal and monetary policy contributed positively in the country. He also acknowledged officials of finance ministry and FBR for their contributions.

“We introduced bounded storage policy which will contribute a lot in country in future,” he said.

He highlighted that under the leadership of former PM Muhammad Nawaz Sharif in 2017, Pakistan witnessed the lowest inflation and more than 6 percent GDP growth whereas stock market capitalization was more than 100 billion dollars.

Dar maintained that a political project was launched in 2018 and the nation paid a very high price for it. When the PTI government left power, the total foreign loan and liabilities of the country had reached to $ 130 billion whereas total foreign loan of the country was $ 70 billion dollar in 2017. The stock market also lost its capitalization and it stood at just $ 22 billion when the PTI government left power, Dar said.

Expressing gratitude for China’s substantial assistance, which played a vital role in boosting Pakistan’s overall reserves to $ 10 billion, Dar said, “Our target is to further increase reserves to $ 14-15 billion by end of the government’s term.”

On the other hand, Minister for Planning Ahsan Iqbal said IMF agreement will help to stabilize rupee and controlling inflation.

He said Prime Minister’s diplomacy played an important role to reach staff-level agreement with IMF. He said this deal will help us to face economic challenges of the country.

“We need to make efforts to free our economy for foreign aid,” he said, adding: “Exports, digital Pakistan, water and food security, affordable energy and equitable and sustainable development are national goals of the country.” Ahsan Iqbal said Pakistan has the potential to become a trillion dollar economy by 2035.

“Our youth are more powerful than that of atomic power,” he said.

Copyright Business Recorder, 2023

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Fazeel Siddiqui (Overseas Pakistani) Jul 02, 2023 02:01pm
SBA is last chance & test for Pakistan of IMF. I fear Pakistan enroute it's failed 75 years policies led by PDM+establishment as usual will deviate for political gains. This will not only hit economy further hard but will make IMF believe Pakistan will never correct itself unless economically devastated and rebuilt along with true democracy.
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AI Jul 02, 2023 08:27pm
Mr. Dar and Mr. Ahmad, Which remaining Pakistani infrastructure assets (highways, airports, ports etc.) have you given up in collateral to secure the new loan? Since none of the past loans have’s been full paid, so shall the Pakistani people assume that these assets will never be owned by IMF forever? Lastly, in your calculations, what is the cost of the loan that each Pakistani citizen and future generation will have to return?
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