IMF to dictate Shehbaz govt as Pakistan loses right to decide on its budget

Islamabad, Jun 24: With its foreign exchanges depleting rapidly the current coalition government headed by Prime Minister Shehbaz Sharif is forced to present the budget in accordance with the directives of the International Monetary Fund (IMF).

Senator Sherry Rehman blamed the former Pakistan Tehreek-i-Insaf (PTI) government led by Imran Khan for pushing the nation close to bankruptcy.

The debate in the National Assembly on the federal budget went on for three hours without a quorum,. Rehman who is also the federal minister for climate change said, 'this is absolutely an IMF budget and there is no doubt about it.

According to a media report, Pakistan has reached an agreement with the IMF to resume the stalled $6 billion assistance package and open the doors for funding from other international sources.

The deal was reached on Tuesday night following the IMF staff mission and the Pakistan team lead by Finance Minister Miftah Ismail agreeing on an understanding on the 2022-23 budget after authorities committed to generate Pakistani Rupees Rs 436 billion more taxes. The petroleum levy was also was also gradually up to Rs 50 per litre, Dawn reported.

Earlier, media reports had claimed that Islamabad was seeking Washington's support for renewing its EFF with the IMF.

As the largest shareholder, the US has considerable influence over the IMF's decision-making.

On Saturday, Pakistan's Ambassador to the United States Masood Khan met Assistant US Trade Representative (USTR) for South and Central Asia Christopher Wilson to discuss expanding trade relations between the two countries and encouraging US investments in Pakistan, a statement said.

The office of the USTR is responsible for developing and coordinating US international trade, commodity, and for directing investment policy. It also oversees trade negotiations with other countries, the newspaper reported.

Pakistan signed a 39-month, USD 6 billion EFF in July 2019, but the IMF stopped the disbursement of about USD 3 billion when the previous government reneged on its commitments, the report added.

Currently, Islamabad wants the IMF to not only resume disbursements but also expand the size and duration of the programme, the report said.

A top finance ministry official confirmed on Sunday night that they had not yet received the first draft of the memorandum of economic and financial policies (MEFP) from the IMF as targeted earlier because certain matters remained unsettled.

We are working very closely with the IMF and will soon reach some conclusion, the official said.

The government is aiming to secure the passage of the budget 2022-23 from the National Assembly on June 27-28, according to the finance ministry.

Pakistan has repeatedly been seeking international aid to support its failing economy.
In May, Saudi Arabia agreed to provide Pakistan with a "sizable package" of around USD 8 billion to help the cash-starved country bolster dwindling forex reserves and revive its ailing economy.

Pakistan secured the deal during the visit of Prime Minister Shehbaz Sharif to Saudi Arabia in April. The financial package includes doubling of the oil financing facility, additional money either through deposits or Sukuks and rolling over of the existing USD 4.2 billion facilities.

(With agency inputs)