Finance Minister Asad Umar on Monday said that Pakistan is ''very close'' to securing an International Monetary Fund (IMF) bailout package. However, he clarified that Prime Minister Imran Khan''s meeting with International Monetary Fund (IMF) Managing Director Christine Lagarde, which took place on the sidelines of the World Government Summit on Sunday "was not a negotiation round and no deal was reached between the two sides."
In fact, the finance minister added, the meeting was merely meant to build common ground between Pakistan and IMF''s top leadership. He said the IMF is committed to supporting Pakistan. The Finance Minister made it clear that the IMF doesn''t offer financial assistance on sympathetic grounds. He was addressing a meeting at Sarhad Chamber of Commerce and Industry (SCCI) in Peshawar. It was attended, among others, by chamber president, Faiz Mohammad Faizi, former presidents, member executive body and a large number of traders and industrialists.
Peshawar is a key trade point for South Asia and Afghanistan, the minister said, adding that Pakistan will do whatever is possible for Afghan peace. "Our exports have reduced, and we need to increase trade with countries within as well as outside the region," he said. As relations with People''s Republic of China are boosting under the CPEC, the Minister stressed the need for improving relations and enhancing trade with rest of the world.
He said the government will simplify the tax procedure in order to widen the tax net. He said a pilot project to this effect will be introduced for traders in Islamabad first and then will be replicated in other parts of the country. In response to reservations expressed by business community, the Finance Minister stressed the need for further bolstering trade relations with Iran and Afghanistan as well as Central Asian countries. He also noted that officials from Western countries often say that regional trade is important and that Pakistan should improve trade relations with India.
He said a strategic economic framework is being developed with Turkey and its first draft will be handed over to Istanbul in February. He added that the Turkish delegation, that is working on the framework, being led by the Turkish vice president, while the Pakistani side is being led by the finance minister himself. The finance minister spoke about the gas discoveries made in southern districts of the Khyber Pakhtunkhwa which, according to him, will help improve the supply of this commodity in the province.
He said the province is also endowed with rich water resources and hydel potential of the country needs to be effectively used. Responding to reservations of the business community, the Minister said that the payment of refunds will be ensured within a week time, while it was completely unjust to issue new gas connections in Khyber Pakhtunkhwa on RLNG and said that matter will be discussed with the concerned authority.
He said that the issues relating to cotton export will be discussed in the upcoming meeting Economic Coordination Committee, while he also assured that the issues pertaining to electricity loadshedding will be taken up with Minister for Power. He also said he will take up the issue of harassment of businesspeople by taxmen. He said the government will give due respect to the business community.
Regarding provincial tax-exemption to traders affected by Bus Rapid Transit Project Peshawar, the Minister asked the Provincial Minister for Finance, Taimoor Saleem Khan Jhagra to consider the demand of the community. Earlier, speaking on the occasion, SCCI president Faiz Mohammad Faizi highlighted the issues of business community, relating to tax refunds, gas and electricity, reforms in existing taxation and low trade with Afghanistan.
Former FPCCI president, Ghazanfar Bilour, Women chamber president Azra Jamshid, formers presidents Zahid Shinwari, Riaz Arshad, Malik Niaz, Haji Mohammad Afzal, Hayatabad Industrial Estate Peshawar president, Zarak Khan, Manzoor Ali, Naeem Butt and others also spoke on the occasion. Reuters adds: On Sunday Prime Minister Imran Khan met IMF chief Christine Lagarde in Dubai to discuss a bailout, and the country''s foreign currency reserves have dwindled to around $8 billion, just enough to cover about two months of imports.
That meeting ended with a pledge to continue talks, and while there had not been any indication of a breakthrough, Umar said an agreement was coming into view.
"Our differences have narrowed," he told business groups in Peshawar. "It seems we have come very close to having an agreement with the IMF."
Talks with the IMF began soon after Khan''s government was appointed last August but a package has been held up by differences over the pace and scale of reforms that Pakistan would be required to undertake.
The IMF has pressed Pakistan to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of gross domestic product this year.
Pakistani officials say they agree on the need for reforms but do not want to sign up to conditions that would derail the economy, with growth set to slow this year to around 4 percent from 5.2 percent last year.
Khan has long resisted foreign loans, once declaring he would rather commit suicide than seek an IMF loan. However Pakistan''s fast depleting foreign reserves and a widening current account deficit left him little choice than to seek international assistance.
While no IMF package has been agreed, Pakistan has raised more than $10 billion in loans and credit arrangements from Middle Eastern allies such as Saudi Arabia and the United Arab Emirates as well as support from China, its partner in the vast China Pakistan Economic Corridor project. The economic turbulence facing Pakistan was underlined on Monday when Moody''s Investors'' Service cut its outlook on Pakistan''s banking sector to negative, citing the banks'' large holdings of government bonds "that link their credit profiles to the low-rated government."
It noted that the Pakistani rupee had depreciated by 30 percent against the US dollar, interest rates had risen by 450 basis points between Dec. 2017 and February 2019, and inflation was rising; "all factors which affect business and consumer confidence and the private sector''s debt repayment capacities." Earlier this month, Pakistan''s credit rating was downgraded by Standard and Poor''s, which cited diminished growth prospects and elevated external and fiscal stresses.
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