No urgency for Pakistan to enter IMF program: Asad

ISLAMABAD: Finance Minister Asad Umar said that Pakistan is in no rush to sign a bailout package deal with the International Monetary Fund (IMF).

In an interview with media, the finance minister said, “I have no urgency right now to get into an IMF program. We are in discussions [with the IMF]. When we reach the (outlines) of a program which we believe is in the best interests of Pakistan’s economy, we’ll go ahead and sign that.”

The finance minister highlighted that the pressure to rush a deal with the monetary watch-dog had eased with the recent combination of bilateral financial support from historical allies and a host of economic measures taken by the government in its first hundred days in power.

“The recent support has resulted in a current account deficit of $6-7 billion less than the previous financial year,” the finance minister claimed. “Funding from “friendly countries” would help shore up the economy over the remainder of the current financial year,” he added.

‘Saved $6-7 billion of financing need’ 

Referring to the $6-billion package agreed with Saudi Arabia this October and expected aid from China and the United Arab Emirates (UAE), Umar added, “So I’ve saved $6-7 billion of my financing need and then I’ve arranged funding from bilateral sources to bridge the gap.”

When asked how much aid Pakistan expects from China and UAE, Umar refused to provide a figure for packages but said that, in both cases, it was just a case of “dotting the i’s and crossing the t’s” on the agreements.

Turning to the recent plummeting that the rupee took against the dollar Umar denied that the government had allowed the rupee’s value to drop in order to fulfill a precondition of an IMF bailout. “The main sticking point in negotiations with the organisation was the pace of reforms,” Umar added.

“We believe that if you try and make reforms too quickly, if you try and make an adjustment too quickly, you’ll crash the economy. And that is not in our interests, not even from a debt-sustainability point of view,” he asserted.

CPEC plans review not off table

Responding to a question regarding reviewing agreements related to the China-Pakistan Economic Corridor (CPEC) programme was off the table, Umar said: “Not at all.”

“The IMF had a lot of questions. The Americans had a lot of questions around CPEC,” he said. “We made a presentation, we shared the data with them — first meeting. They never came back after that.”

He added new projects slated to be added to the CPEC portfolio included a railway line from the port city of Karachi to the northwestern town of Peshawar and the establishment of special industrial zones.

“There are a few other projects in the area of the industrial cooperation framework that is being finalised, and which will lay the basis on which future industrial cooperation will take place, private sector-to-private sector,” Umar said. “So, from government-to-government, which is what the first phase of CPEC was, it will be moving to business-to-business.”

Saudi aid ‘not a rescue package’

Explaining the Saudi aid package, Umar said $3 billion in foreign currency support for a year and a further loan of up to $3 billion in deferred payments for oil imports, the finance minister said $1 billion of the $6 billion package had been disbursed so far.

“It’s not a rescue package, it’s a financing package,” he said. “Saudi Arabia will earn a rate of return on that investment.”

He explained that the pending agreements with China and the UAE were also not aid packages: “These are all financial transactions. There are loans, there are trade finance facilities. Pakistan is not taking aid from anyone.”

No trade talks with India before 2019 elections

Turning to the recent World Bank report which stated that trade between India and Pakistan was far below its potential of $37 billion, the minister said Pakistan was ready to engage in a constructive trade dialogue with its neighbour but “it can’t be a one-sided relationship”.

However, he ruled out any discussions on trade with India before general elections there in 2019 and said Pakistan would not take “any kind of unilateral step” when it came to granting India Most Favoured Nation (MFN) trade status. 

On the government’s promise of attracting investment from Pakistanis living abroad, the finance minister said rules for a diaspora bond were approved by the Cabinet a week ago and the bond would be issued late December or January.

“There are equity-related or investment opportunity-related diaspora investments which are being finalised. The board of investment has worked on them; there was a presentation to the prime minister today (Thursday) about some of those,” Umar said. “First the diaspora bonds will be launched and then these initiatives will follow quickly after.”