ISLAMABAD, (MANEND NEWS): The Shehbaz-led government has decided to move ahead with the annual budget preparations without taking any dictation from the International Monetary Fund (IMF), sources said on Thursday, as Prime Minister Shehbaz Sharif directed the finance ministry to ensure maximum relief to the masses.
In a major development that could lead to long-term economic and political consequences not only at the domestic but also at the international level, the government has decided to end the current IMF programme without completing it. The current programme is going to end on June 30.
Pakistan is supposed to get over $2 billion in tranches. However, the staff-level agreement has not been materialised even for the disbursement of $1bn after the completion of 9th review of the Extended Fund Facility (EFF). Two more reviews would be required for the remaining over $1bn as the global lender is not ready to ease the tough conditions.
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It is said that the 10th and 11th reviews are impossible before June 30 and that the government would initiate dialogue for a new programme immediately after presenting the budget.
The news comes a day after State Minister for Finance and Revenue Dr Aisha Ghaus Pasha censured the IMF over its “interference” in Pakistan’s internal matters.
She described terming IMF Mission Chief for Pakistan Nathan Porter’s statement — regarding the political situation in the country — “extraordinary”. Pakistan’s conduct was in line with the law, the state minister said.
However, Dr Pasha Dr Pasha confirmed that Prime Minister Shehbaz Sharif contacted IMF Managing Director Kristalina Georgieva and assured her that Pakistan would meet all the obligations.
When asked about Pakistan’s plan of action in case it fails to convince the fund before the expiry of the programme on June 30, she said the finance ministry was not sitting with its eyes closed.
“There is always a Plan B but out priority is to revive the IMF programme,” Dr Pasha said, adding that the delay in agreement was not in the interests of both Pakistan and the IMF.
On Tuesday, Porter had said, “We take note of recent political developments, and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and the rule of law.”
He also said that they were engaging with Pakistan to pave the way for the international lender’s board meeting and talks would focus on the budget for next financial year.
Porter’s statement also had a long list of demands including restoration of foreign exchange proper market functioning, keeping in mind programme goals in preparation of the upcoming budget, and adequate financing.
He said broadly speaking, “overcoming the present economic and financial challenges would require sustained policy efforts and reforms for Pakistan to regain strong and inclusive private-led growth.”