IT was widely believed that non-resumption of the stalled programme of the International Monetary Fund (IMF) had more to do with factors other than fulfilment of the tough conditions, which Pakistan has already met, but a formal statement of Finance Minister Ishaq Dar on the lingering issue explains it all in greater details. Addressing the Senate Standing Committee on Finance and Revenue on Thursday, he firmly stated that geopolitics was behind the suspended programme as global institutions want Pakistan to default like Sri Lanka and then negotiate with the IMF. The Minister was still optimistic that something concrete would emerge by the close of the month as talks with the IMF are ongoing but also stated in categorical terms that with or without the IMF bailout package the country would meet its obligations and there would be no default.
It is also a matter of satisfaction to hear from the Finance Minister that the Chinese too understood that ‘politics is being played with Pakistan’, so they rolled over deposits and re-financed commercial loans. Substantiating his statement about the political nature of the issue, he gave details of different stages of the negotiations with the IMF during the last one year and said the Fund was delaying the revival of the programme and wasting time. The Minister added that there were no valid reasons for delaying the 9th Review of the IMF, and the Fund staff approach was non-professional. The IMF was so demanding that it wanted Pakistan to share details of the budget for the next financial year, a demand that the Minister resisted but then had to share after telephonic conversation of Prime Minister Shehbaz Sharif with the Managing Director of the global lender. The stand taken by the Finance Minister on objection of the Fund to concessions to different sectors given in the new budget is reflective of national thinking on the issue as he maintained Pakistan being a sovereign country cannot accept everything the IMF demands. Pakistan’s economy faced both internal and external pressures of unprecedented nature during the last one year and based on that experience, the Government prepared budgetary proposals to stimulate the dormant economy and reduce dependence and heavy reliance on foreign loans. It is mainly because of the prescription that the IMF proposed for Pakistan that today investors are pulling out their investment in the country citing exorbitant cost of production and doing business. The situation is alarming and it is but natural on the part of our planners to offer incentives and subsidies to those sectors that can contribute meaningfully in bringing the economy back on track. The exemptions given to the IT, agriculture and Small and Medium Enterprise (SME) sectors were the need of the hour to spur growth which plummeted to abysmal 0.29 percent. The likely impact of these incentives can be gauged by the fact that in IT alone the return, which stands currently at 2.5 billion dollars, would increase to $4.5 billion next year. The nation, therefore, stands behind the Government in its endeavours to make Pakistan stand on its own feet and we hope it will not succumb to undue pressure. The Government adopted the viable approach of restricting unnecessary imports in the face of fast-depleting foreign exchange reserves and thereby met all external obligations. External inflows have not yet increased but the Minister maintains things have been arranged, no foreign payment would be deferred in months to come and that the Government was considering lifting restrictions on imports. The announcement is encouraging as several industries are facing immense challenges compounding inflation and unemployment situation as well but there is absolutely no logic to fund imports of luxury and unnecessary imports out of foreign loans that come at heavy price.
