Pak PM holds talks with IMF chief Kristalina

Islamabad: Pakistan Prime Minister Shehbaz Sharif on Friday held talks with the International Monetary Fund (IMF) chief Kristalina Georgieva to break the deadlock over the release of the next tranche of assistance for the cash-strapped country. The contact was made four days before an expected face-to-face meeting between the prime minister and the IMF chief on the sidelines of the Geneva Conference for flood victims.
Addressing a business gathering here on Friday, Sharif confirmed he received a call from IMF Managing Director Georgieva and they discussed the issue of disbursement of an already pledged loan.
“I told the IMF that we cannot put more burden on our masses. I also urged that the IMF should send its delegation to Pakistan for talks,” he said, adding that the delegation was expected to arrive over the next three or four days to discuss various issues.
The global lender has refused to issue the new instalment of the already agreed loan since Pakistan was not living up to the promises it made when the stalled loan of USD 6 billion was restored last year. Prime Minister Sharif also sought relaxation in the demand to increase electricity prices to compensate for the deviation of around Rs 500 billion from the annual circular debt management plan. These remain the major stumbling blocks in reaching an initial understanding of a staff-level visit by the IMF to Pakistan.
“However, the government stood ready to impose flood levy and windfall income tax on commercial banks,” sources said.
There was also a resolve from the Pakistani side to increase the energy prices in future against any further deviation. Pakistan and the IMF had a round of engagement on November 18 last year, but could not finalise a schedule for formal talks on the overdue ninth review.
The IMF board in August last year approved the seventh and eighth reviews of Pakistan’s bailout programme, allowing for a release of over USD 1.1 billion.
The much-needed bailout package from the IMF helped Pakistan avert an imminent default, amidst the persisting political uncertainty and the devastating floods that have displaced more than 33 million people.
As the economy remains under pressure, the premier also made calls to the Chinese counterpart, Li Keqiang, seeking Beijing’s help to avert a looming default while army chief General Asim Munir met the Saudi defence minister in Riyadh.
The contacts were made as the official foreign exchange reserves dipped to USD 5.6 billion.
In what appeared to be an alternative to the IMF, Finance Minister Ishaq Dar, a day earlier, expressed hope of receiving a USD 3 billion second bailout from Saudi Arabia within days, vowing to raise money through the sale of assets to beef up the critically-low foreign exchange reserves.
But the Saudi cash assistance can only delay the default, as it cannot permanently solve the problem.
The finance minister had said that the government was committed to the IMF programme.
But at the same time, he added: “We will not take measures that may increase the burden on the common man.”
The IMF had earlier asked for a plan to end the additional Rs 500 billion circular debt, increase energy prices, imposition of new taxes, let the rupee gain its real value and achieve the primary budget surplus targets, excluding flood-related expenses – the conditions that will stoke inflation that is already standing at 25 per cent, the Express Tribune reported.