ISLAMABAD: Minister of State for Finance Dr. Ayesha Ghospasha has ruled out the possibility of considering any other option – Plan B – if Pakistan turns to the International Monetary Fund (IMF) to revive the stalled loan program. ) fails to attract .
He said, “Let me state clearly that in case of non-revival of the fund programme, there was no other option under Plan B which we are considering as the government completes the pending ninth review of the IMF programme. determined to restore.”
During the briefing of the National Assembly’s Standing Committee on Finance at the Federal Board of Revenue (FBR) headquarters, MNA Ali Pervaiz Malik asked Dr. Pasha about Plan B in case of failure to revive the IMF program. What and said that there was talk about the dollar. Amnesty scheme to improve dollar liquidity.
The minister further disclosed that the fund did not accept the external financing gap of $4.5 billion from Pakistan.
Dr. Pasha revealed that the IMF is still sticking to its estimate of a financing gap of $6 billion for the current fiscal year compared to Islamabad’s estimate of $4.5 billion from multilateral and bilateral lenders. Assurances have been given to the IMF.
He added that the government has shared the budget framework for the next financial year to satisfy the IMF. However, Pakistan is awaiting a response from the IMF to share its recent steps to reduce the gap between interbank and open market rates on exchange rates and assurances on external financing gaps.
It should be noted that a broader agreement on these three major conditions could pave the way for the implementation of a staff-level agreement.
The federal minister clarified that the sharing of budget data is not a part of the ninth review as it will be a part of the 10th review, however, Prime Minister Shahbaz Sharif has decided to share the numbers for the revival of the fund program.
A senior official of the State Bank of Pakistan told the NA panel that authorization of credit cards from exchange companies up to the interbank rate would require an average of $70 million to $100 million on a monthly basis and he told the FBR. It has recommended to increase tax on credit transactions. Cards in foreign exchange in the coming budget to reduce the demands of increased foreign exchange needs.
Dr Pasha said there was a lack of trust, not because of the current government, but he accused the previous PTI-led government of giving fuel and electricity subsidies without a target before leaving the government in the last financial year. The IMF was in violation of the agreement. .
He said that Saudi Arabia has assured additional deposits of $2 billion while the United Arab Emirates (UAE) has pledged $1 billion.
The World Bank committed $450 million through the RISE-II program loan and $250 million through the Asian Infrastructure Investment Bank (AIIB).
The rest of the flood relief is expected to come through Geneva commitments.
He said that Pakistan secured financing assurance of 4.5 billion dollars. Initially, it was planned that of the $6 billion, the government would receive assurances of $3 billion before signing the staff-level agreement. He said the government paid $3 billion to commercial banks with the understanding that it would refinance the loans once the SLA was completed.
“We also expect that after the IMF program is revived, other avenues to secure dollars will open up,” he added.
With the IMF’s ongoing program due to end on June 30, time is limited to complete the pending ninth review under the $6.5 billion Expanded Fund Facility (EFF).
If a staff-level agreement is reached by broad consensus on three controversial issues, including external financing, the budgetary framework, and the free market exchange rate, the program will be reinstated, otherwise the program will be doomed to failure.
However, sources say that Pakistan will have no choice but to take another IMF program in the next financial year considering the external debt repayments of $25 billion.
This excludes the current account deficit and if projected in the range of $7-8 billion for the next financial year, the total external financing requirements would rise to $32-33 billion in 2023-24.
