Pakistan Finance Minister Ishaq Dar blames geopolitics for stalled IMF loan

Pakistan's Finance Minister Ishaq Dar has blamed geopolitics for a stalled IMF loan package and said that global institutions wanted the cash-strapped country to default like Sri Lanka and then take part in the negotiations.

He said no reason had been given by the IMF for the “unnecessary delay” behind the ninth review, which has been pending since November.

Dar also reiterated that the country would meet its obligations with or without the IMF bailout package. “IMF or no IMF, Pakistan will not default,” he was quoted as saying by the Dawn newspaper.

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He alleged that geopolitics was behind the stalled loan programme as global institutions wanted Pakistan to default like Sri Lanka and then enter negotiations, it said.

Dar, however, said the negotiations with the Washington-based global lender were ongoing and the ninth review would be complete this month.

The International Monetary Fund (IMF) signed a deal in 2019 to provide USD 6 billion to Pakistan on fulfilment of certain conditions.

The plan was derailed several times and the full reimbursement is still pending due to insistence by the donor that Pakistan should complete all formalities.

Dar said on Thursday that although demands for arranging guarantees for USD 3 billion from friendly bilateral partners had been met as committed earlier, the remaining USD 3 billion have been assured by the World Bank and the Asian Development Bank.

The minister said China realised the politics behind the unnecessary delay and its commercial banks agreed to roll over loans to Pakistan.

He said the assurance of USD 3 billion was given by Saudi Arabia and the UAE to the IMF, besides USD 400 million from the World Bank RISE project and USD 250 million from the Asian Infrastructure Investment Bank.

His remarks came after the IMF raised several issues in Pakistan's budget for the fiscal year 2023-24, calling it a "missed opportunity".

The government unveiled a Rs 14.4 trillion budget for 2023-24 in the National Assembly last week as it battled to fend off a looming default due to shrinking foreign reserves.

Dar said IMF’s reservations on the current budget might be valid, but the IT, agriculture and Small and Medium Enterprise (SME) sectors were the “drivers of growth” and exemptions given to these sectors were inevitable to ensure the country’s economic growth, which currently stands at 0.29 per cent.

“How can we achieve growth without facilitating certain areas of the economy?” he asked.

He said a return of USD 2.5 billion was expected from the IT industry this year, which would increase to USD 4.5bn next year.

He said exemptions have been given by keeping in view the potential growth of the IT industry.

Pakistan’s economy has been in a free fall mode for the last many years, bringing unbridled pressure on the poor masses in the form of unchecked inflation and making it almost impossible for a vast number of people to make ends meet.