ISLAMABAD, Oct 29: The government told the Senate on Wednesday it would consider an IMF aid package on Islamabad’s own terms if other sources failed to provide up to $5 billion it needed within the next 15 to 20 days to cope with the present economic crisis.
The prime minister’s adviser on finance Shaukat Tareen said at the start of a debate in the upper house on the country’s prevailing economic situation that other sources being tapped for the immediately needed inflow of funds were the newly created Friends of Pakistan Forum and international financial institutions (FIs).
“We need this amount within next 15 to 20 days and if Friends of Pakistan or other IFIs do not ensure us this amount, we shall have to go to IMF,” he said in his first speech to the Senate in which he also gave outlines of a roadmap to take Pakistan out of its present economic difficulties marked by fears of a default in repayment of foreign debts if a bailout is unavailable.
But he said the roadmap would be discussed in detail with all stake-holders.
The adviser’s speech was followed by a bombardment of questions from both the opposition and treasury benches until late into the night when Mr Tareen told the house the International Monetary Fund had not proposed any new conditionalities for the package although questions about ways to contain the rising inflation were being debated.
Many members from both sides of the house either opposed taking an IMF package or voiced fears about the cost of such a course, particularly a possible adverse impact on the poor sections of society. But some members said there was no other option left because they did not hope Pakistan would get the needed help from other sources such as Friends of Pakistan, which includes several friendly countries including the United States and China as well as the United Nations and the European community.
“If I have my say, I will not have the IMF programme,” Mr Tareen said in his second speech of the Senate sitting while referring to criticism of the Fund vis-à-vis the experience that Pakistan and many other developing countries went through in the past.
But he said the situation had changed now and there would be no harm in opting for the IMF if it accepted Pakistan’s economic plan, which he added would not hit its poverty alleviation programme or agriculture.
“If they (IMF) endorse our plan, and they put the money on the table, I will ask the government to consider it rather than face a default,” he said.
He said Pakistan could not afford a default whatever the pain.
The adviser also informed the house in reply to a question from the leader of house Raza Rabbani that “our leadership is seriously considering” Iran’s offer “in a difficult situation” to supply oil to Pakistan on a deferred payment basis although the Iranian crude was heavy while Pakistan had refining facilities only for light crude.
ROADMAP: Explaining his roadmap, Mr Tareen said Pakistan needed immediate measures for economic stability and said: “We need to stand on our feet. We cannot afford to default. Wherever we can go and whatever we can get, we have to fulfil our financial obligations.”
He called for planning to strengthening macro economic indicators to control inflation and ensure sustainable growth.
To achieve these targets, he said, tax to GDP ratio will have to be increased to 15 per cent from the existing 10.5 per cent in five to seven years.
He also hinted at plans to remove perceived loopholes from the tax system. “We shall not be harassing anyone, but we shall have to collectively frame the rules and bring more areas into tax net through consultation.”
He proposed cutting non-development expenditures such as on vehicles, petrol usage and foreign visits and involving the private sector in executing public sector development programme in what he called public-private partnership.
“If half of the spending comes from the private sector and management is shifted to them, it would enhance efficiency.”
Mr Tareen said the government strategy would be to evolve a safety net for the poor and doubling the households getting assistance under Benazir Income Support Programme from 3.5 million to seven million.
“We shall have to pick one child from each household for relevant technical training for six to nine months enabling them to earn living and help alleviate poverty,” he said.
Another initiative, he said, would be health insurance for every poor family for which the government would pay Rs15,000 to 20,000 annually for each family.
“We shall also have to start public works at union council level to provide employment to local people. For all these measures we shall have to cut down allocations of certain areas.”
He said the government would also resolve the issue of under-payment to farmers for their crops.The manufacturing sector, he said, was showing a negative growth due to power and gas shortages and needed innovation and consolidation to compete in the international market. “We shall also have to devise an integrated energy plan.”
He also stressed the need for public-private partnership to develop communication infrastructure like roads, bridges and other projects. “We need to develop a policy framework inviting private sector to come in and invest in utilities.”
Talking of the need to develop the capital market, Mr Tareen said although Pakistani banks were healthy, it was “still a question mark” if they were also meeting the needs of the people.
“We shall have to tell our banks to become responsible citizens of Pakistan. They must go to rural areas and care for the needs of people there.” he added.
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