Refutes reports of Pakistan using an IMF loan to pay off its debt to China
The federal government is likely to present a new budget for the fiscal year 2019-20 in the National Assembly and Senate on May 24, Finance Minister Asad Umar told the media in Islamabad on Monday.
“Earlier, May 17 was proposed for the presentation of the new budget, but now May 24 is under consideration and a decision will soon be taken in consultation with the National Assembly speaker,” he said.
To a question regarding a possible agreement with the IMF, Umar said both parties are very close to an agreement for a new loan programme as all basic differences have been overcome.
“We are in a lending zone. I am going to attend spring meetings of the IMF and World Bank in Washington DC. During the visit, a date will be finalised for a visit of an IMF staff mission to Pakistan for final talks,” he said.
The direct financing from IMF may be small in size but the agreement with IMF will enable and facilitate Pakistan to arrange more financing from other multilateral institutions and the international bond market, he said.
So it doesn’t matter whether a $6 billion or $10 billion agreement is signed with the IMF, he clarified, adding that there is no “unbridgeable” gap between Pakistan and IMF for the proposed loan agreement.
Umar defended the recent increase in the petroleum prices saying the full impact of increase in international prices is not passed on to the consumers.
OGRA had proposed a Rs11 per litre increase, but the government decided a maximum increase of Rs6 per liter, he added. The increase in petroleum prices has nothing to do with the IMF conditions, he added.
The finance minister made it clear that he has full backing of the federal cabinet and hoped that like in the past, all decisions or initiatives including an agreement with IMF will be fully owned by the cabinet.
Pakistan is just a few weeks away from securing a possible IMF bailout, he said.
In an interview with Financial Times, the finance minister said that he hoped an agreement with the IMF would be reached by “late April, first half of May” for a package anywhere between $6 billion to $12 billion.
The US and some commentators have expressed concern that the IMF loan would be used by Pakistan to pay its debt to China.
Umar dismissed the concerns in the interview and said: “We have a debt problem, a serious debt problem, but not a China debt problem.”
Pakistan had been added to the FATF grey list last year and experts believed that the FATF would be essential in unlocking an IMF bailout.
“I think its naive to assume that there is no relationship between FATF and the next IMF programme,” said a former finance official. “The IMF will probably demand some major changes in the banking structure, which are also the kinds of changes that are being sought by the FATF.”
Umar said that sufficient steps are being taken to address FATF’s concerns.