ISLAMABAD: Finance Minister Miftah Ismail has refuted the reports on the alleged postponement or delaying of the International Monetary Fund (IMF) loan program due to the anti-corruption law, however, he failed to elaborate on its progress.
In a Twitter message, Miftah Ismail wrote, “I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track.”
I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track. https://t.co/6c0MNvQ0g3
— Miftah Ismail (@MiftahIsmail) July 4, 2022
On factual grounds, the present government led by Pakistan Muslim League Nawaz (PML-N) failed to show any progress on the IMF loan program despite making tall claims. The country has neither received any tranche of loan from the global financial institution nor any documented shape of an agreement came forth yet.
A few days ago, News360 reported that a documented shape of the agreement has not emerged yet despite settlements on all the issues between the government with the International Monetary Fund (IMF). There were media reports about its alleged postponement as the IMF set condition for Pakistan to pass an anti-corruption law.
IMF wants Pakistan to accept conditions first to get $2b loan
However, the coalition government continued blaming the previous Pakistan Tehreek-e-Insaf (PTI) government for leaving no option other than accepting the tough conditions of the global financial institution.
Declaring implementation of IMF conditions mandatory, the coalition increased the prices of petrol, electricity and other commodities to a record highest. Moreover, the US dollar has reached the highest level in the history of the country while foreign exchange reserves are also under severe pressure.
Economists said that an agreement with the International Monetary Fund is not only necessary to acquire a loan but other international institutions and countries are also subject to a loan or concession from the IMF.
The government had repeatedly said that there is no way out except the agreement with the IMF and diverted the financial pressure toward nationals. Following the coalition government’s decisions, not only electricity, and petroleum products prices are increased but the budget for FY2022-23 was also finalised by keeping in view of conditions set by the IMF. The people are facing skyrocketing inflation and their financial troubles are getting worse.
After seeking US support, Pakistan, IMF agreement enters final phase
Finance Minister Miftah Ismail, Minister of State for Finance Dr Ayesha Ghous Pasha and other government officials were claiming that matters have been settled with the International Monetary Fund (IMF) under which Pakistan will receive $1 billion out of $6 billion loans under the IMF bailout program. Pakistan has already got $3 billion under the same program.
Pakistan had requested the IMF to increase the loan program from $6 billion to $8 billion and also asked the IMF to extend the loan period by one year. Pakistan wants the program to continue till 2024 instead of 2023, it was learnt.
Pakistan’s current account deficit also reached $13.2 billion, whereas, whereas, the country will require $30 billion in the current fiscal year for the payment of the loans and interest. On the other hand, in case of failure of negotiations with the IMF, Pakistan will face difficulties to get financial assistance or loans from other countries including China and many other financial institutions.
The appreciation of the dollar and the depreciating value of the rupee is a matter of concern for the country’s economy, which has been driving up inflation and affecting external payments. From April 11 to June 21, the dollar rose up to Rs28 which increased Pakistan’s foreign debt by Rs3,600 billion.
According to economists, the main reason for the recent rise in the value of the dollar is the delay in the loan agreement with the IMF that has blocked foreign funding for Pakistan, whereas, the decline in foreign exchange reserves is due to an increase in imports and decrease in exports. Pakistan relies on tax aid instead of producing different products locally.
Pakistan is facing problems such as depletion of foreign exchange reserves as the outflow of dollars abroad in terms of imports is much higher than the number of dollars coming in through exports and remittances.
Despite the new government formed in Pakistan in April, it apparently failed to restore the IMF loan program.
Pakistan has received $2.3 billion from China and is expected to receive more loans. Pakistan is also expected to get $2 billion loan from Asian Development Bank and $400 million from the World Bank after finalising the agreement with the IMF.
Despite the government’s claims, the question is still here whether the country has signed the agreement with IMF or not that is causing economic uncertainty. No country can just run on debt, the government will have to make economic reforms besides eliminating the fiscal deficit to improve the economic situation.