The recent statements of Finance Minister, Senator Ishaq Dar applies to two things that completely negate each other that what is valid or what is true, he said that geopolitics was behind a stalled International Monetary Fund (IMF) programme as global institutions wanted Pakistan to default like Sri Lanka and then enter negotiations, but in the same breath, he insisted that negotiations with the Fund were ongoing and the ninth review would be complete within June 2023.
Testifying before the Senate’s standing committee on finance, he once again stressed that the country would meet its obligations with or without the Fund’s bailout package.
He said no reason had been given by the IMF for the unnecessary delay behind the ninth review, which has been pending since November 2022. “IMF or no IMF, Pakistan will not default,” he added.
He told the journalists after the meeting that everything was in order and there was no need to worry as everything is arranged.
Recalling the concerns expressed by the credit rating agency, Fitch in late April that how Pakistan could arrange US$3.7 billion repayments, Dar said, “We did and it’s one and a half months since then.”
In Senate, responding to a query from the panel’s chairman Senator Saleem Mandviwalla, Dar said the IMF’s demand for a US$6 billion guarantee on external resources was unjustified and said the Fund’s delaying plan apparently suggested a political agenda.
He explained that although demands for arranging guarantees for US$3 billion from friendly bilateral partners — Saudi Arabia and the United Arab Emirates — had been met as committed earlier and the remaining US$3 billion had been assured by the World Bank and the Asian Development Bank.
The minister said China realised the politics behind the unnecessary delay and its commercial banks agreed to roll over loans to Pakistan.
He argued that the financing gap for the country was projected at US$6 billion when the staff-level talks were concluded in February based on a US$7 billion current account deficit estimated by the IMF.
Now when the deficit had been projected to be US$4 billion by the end of June, the financing gap also should have been brought down accordingly to US$3 billion, but the IMF remained stuck to the US$6 billion financing requirement.
He said the assurance of US$3 billion was given by Saudi Arabia and UAE to the Fund besides US$400 million World Bank RISE project and US$250 million by the Asian Infrastructure Investment Bank.
He told the committee that he was not ready to consult the budget with the IMF unless it completed the ninth review and started a discussion on the 10th, but the prime minister intervened a few days before the budget and provided the budget to the IMF.
The finance minister said the government restricted imports to meet external obligations as the country’s foreign exchange reserves were fast depleting and the top priority was to ensure all external payments on time.
He said no payments, including international bonds, were delayed and no foreign payment would be deferred in the months ahead. He said the government was considering lifting restrictions on imports and soon there would be good news, most probably by the end of June 2023.
He said wheat, fertilizer and hard currency were being smuggled to Afghanistan and this had to be stopped.
Responding to a question, 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 inevitable to ensure the country’s economic growth, which currently stands at 0.29%. “How can we achieve growth without facilitating certain areas of the economy?” he wondered.
On a suggestion from the committee for giving tax exemption for freelancers to retain their revenue, Dar said freelancers had been allowed to retain 35 percent of their revenue and those earning US$2,000 were exempted from sales tax and they could also procure duty-free hardware.
He said a return of US$2.5 billion was expected from the IT industry this year, which would increase to US$4.5 billion next year. He said exemptions had been given keeping in view the potential growth of the IT industry.
Senator Irfan Siddiqui apprised the committee about the employees of Radio Pakistan who have not been paid pension and proposed a 5pc radio fee in the annual vehicle registration fee to curb the financial crunch of Radio Pakistan.
He also suggested that a PTV fee, which was being charged to consumers in electricity bills, should be raised from Rs35 to Rs50 and the additional amount should be given to Radio employees.
The Senate committee acknowledged the proposal and referred it to the finance ministry for consideration. However, Senator Saadia Abbasi opposed the proposal.
Meanwhile, Ishaq Dar also announced the payment of salaries to the government employees for the current month on June 23, enabling them to meet the needs of their families ahead of Eidul Azha. Speaking at the National Assembly, the minister said he had consulted Prime Minister Shehbaz Sharif, on an official visit, in this regard and directed the finance secretary to ensure the salaries are issued.