Finance Minister hopes for successful outcome of IMF negotiations

ISLAMABAD: Federal Minister for Finance and Revenue, Shaukat Tarin expressed hope for the successful outcome of top-level negotiations between Pakistan and the International Monetary Fund (IMF) for placing the $6 billion Extended Fund Facility (EFF) back on track.

“I believe that the progress we have made to date is really encouraging and as we say Inshallah I see this happening now in this visit,” the federal minister said in an interview at United States Institute of Peace (USIP) in Washington.

The minister said that the concluding 6th round of talks with IMF was the most important part of his visit to United States (US), adding that many virtual meetings already took place while the technical level discussions have also been concluded. He said meetings would be held with seniors members at the IMF, including Managing Director

The minister said his government thought that IMF’s demand to increase power tariffs would trigger inflation, adding that this point was made in technical discussion with the fund, which was also informed that the increase in tariff would be made in gradually manner so that it does not have abrupt impact on inflation.

He said that there were some problems on power side, including excessive capacity, for which the government had to pay, adding the performance of distribution and generation companies was also being improved. He said all this was being successfully negotiated with the IMF

Economic growth gate

The minister said that there was no stagnation in growth, the Pakistan economy would grow by over 5 percent during the fiscal year 2021-22. He said Prime Minister Imran Khan took over an struggling economy in 2018 with $20 billion current account deficit and unsustainable fiscal deficit.

He added they had to go for a tough IMF programme besides taking some politically unpopular decisions including currency devaluation, increasing discount rate and increasing utility prices. The minister said as the country’s economy had started consolidating and growing, the Covid-19 pandemic hit the world.

However, it was skillfully dealt with by the government as was indicated by far lesser human and property losses caused by the pandemic in Pakistan compared to the rest of the world. He said the government during COVID-19 kept investing in two productive sectors, agriculture and industry as well as housing.

He said during Fiscal Year 2021, the growth was recorded at over 4 percent as compared to negative half percent growth the previous year, showing V-shaped recovery. He said the government revitalized agriculture, industry, exports, housing sector.

The minister said he believes that the economy would grow by over 5 percent. However, he said, at the same time there was a need to make sure it is not overheated.

Bottom-up Approach

He said, the government was also ensuring that the underprivileged were not ignored and made to wait for trickle-down effect of positive economic growth, which has never reached to them for many decades. So the government utilized bottom-up approaches to ensure sustainable and inclusive growth.

For this purpose, the government was providing interest-free loans to farmers and low-income families besides issuing health cards and giving technical trainings to help around 4 million households.

The minister said Prime Minister has changed the focus of the country from geo-security to geo-politics to ensure economic welfare of people. This kind of change in focus means everything changes in terms of foreign policy, economic policy, internal security, and whatever else and relationship with neighbours. He said that Pakistan was having good relations with all neighbouring countries, but there were issues with India, which needed to be resolved.

Ease of Doing Business

The minister said that owing to the comprehensive policy decisions, Pakistan jumped 28 places in ease of doing business. He said the prime minister was taking charge himself and Board of Investment (BOI) was reporting directly to him while the PM was holding two meetings every month.

He said that Special Economic Zones (SEZs) would be made autonomous to provide a conducive environment to the foreign investors, adding that autonomous status would initially be introduced in around 6 zones within next 12 months and would be replicated in other zones later.

The minister said that there were around 85 companies run by the government out of which 15 were making loses of around one percent of GDP which includes airlines, railways, steel mill and power distribution companies.

He said that these companies would be disassociated from ministries and their control would be handed over to professional people to overhaul them and within 5 years, these would be privatized. He maintained that in developing countries like Pakistan, government had no job to run the businesses.

He said that people were being probed for flight of capital, adding that nobody would be spared and whoever had done anything wrong would have to face the consequences. The minister said that Pakistan wanted to be friends with everybody including United States and China.