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.
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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.
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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.”