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Fingers crossed as govt assures IMF no new tax amnesty on the cards
• PM says CPEC transformed Pakistan’s development landscape in 10 years
• Ahsan says new loan deal not lasting solution
• Dar, US envoy discuss ways to boost economic ties
ISLAMABAD: Prime Minister Shehbaz Sharif on Wednesday expressed the hope that the $3 billion short-term bailout for the country would be given final approval by the International Monetary Fund board when it meets on July 12 and vowed to fulfil all commitments made to the lender.
Speaking at a ceremony in Islamabad to commemorate 10 years of the China-Pakistan Economic Corridor (CPEC), the premier pointed out that a staff-level agreement had already been finalised.
After eight months of negotiations, both sides signed the staff-level deal on Friday. Finance Minister Ishaq Dar has said Pakistan will receive a first instalment of $1.1 billion, but the IMF board’s approval is needed before funds can be disbursed.
“The agreement will go through, God willing,” the prime minister said.
Meanwhile, Pakistan has submitted a letter of intent to the IMF, assuring the lender that no new tax amnesty will be introduced in the next nine months.
Speaking at the ceremony, Mr Sharif said he was grateful to IMF Managing Director Kristalina Georgieva and her team, adding that this was Pakistan’s opportunity to move towards progress.
He insisted that the government would complete the new IMF programme within the stipulated time. It was the government’s responsibility to rehabilitate the country’s economic conditions and to help it “stand on its feet”, he said, adding that Pakistan was no longer under the threat of default.
Mr Sharif congratulated the participants, including Chinese Charge d’Affaires Pang Chunxue, on the completion of 10 years since the multibillion-dollar CPEC project began.
The premier said the project played a key role in transforming the development landscape of Pakistan with the launch of several multibillion-dollar projects. “We completed power plants run by coal, hydel power projects, Orange Line, road infrastructure […] this was a story of hard efforts,” he said.
He said Chinese investors had invested $26.4bn through the CPEC programme over the 10 years and hoped that it would now change direction towards business-to-business (B2B) development and create economic zones.
Later, the prime minister tweeted that CPEC was “a transformational project that has been pivotal to Pakistan’s socio-economic development”.
“The last 10 years is an inspirational story of how [Chinese] President Xi Jinping’s vision of ‘iron brotherhood’ converted into the completion of projects under the CPEC framework,” he said.
However, he added that “we are still far from fully tapping the potential of CPEC, a worthy goal that has my personal and the government’s staunch commitment”.
The prime minister also asked India to benefit from the mega project instead of creating obstacles. Highlighting the significance of the project, he said Iran, Afghanistan, the Middle East and the whole region would also benefit from it.
The prime minister vowed to double the pace of the development as it was not only for improving roads, rail, seaports and air routes, but it would also help health, education and skill development areas, besides masses’ participation in the process.
Dar meets US envoy
Meanwhile, Finance Minister Dar met US Ambassador to Pakistan Donald Blome on Wednesday and updated him about successfully reaching the staff-level agreement with the IMF, the finance ministry said in a statement.
Before finalising the agreement with the Fund, Mr Dar and Mr Blome engaged in multiple rounds of meetings to address Pakistan’s financial challenges, among other matters, and sought support from Washington to revive the stalled IMF programme.
Mr Dar appreciated the support and cooperation of the United States and reiterated the desire of the government to further deepen bilateral economic and trade ties with the US. However, Mr Dar did not specifically mention support in securing the new deal with the IMF.
Mr Blome expressed confidence in the policies and programmes of the government for bringing economic sustainability to the country, the ministry said. He also extended his support to further promote bilateral economic, investment and trade relations between the two countries.
‘Temporary relief’
Separately, Planning Minister Ahsan Iqbal also expressed satisfaction over the new IMF package but stressed that the deal should be seen as a temporary relief and a mere breather rather than a lasting solution.
During the Twitter Space ‘Beyond IMF Agreement: Challenges and Opportunities for Pakistan’ organised by the planning ministry, Mr Iqbal pointed out that the loan deal was necessary due to a severe balance-of-payments crisis in 2022, which he said was caused by “poor policies” of the previous government.
The country experienced its worst deficit of $50bn after allowing imports worth $84bn, he said and emphasised the importance of introspection and pursuing development for the country rather than merely celebrating the deal.
The planning minister described the short-term financial package of the IMF as a much-needed respite that restored investor confidence. However, he stressed the need for structural reforms to ensure long-term sustainability and to capitalise on this breathing space.
After the IMF deal, the stock market experienced a significant upswing, with renewed confidence from investors. The rupee also gained against the US dollar in the interbank market. However, Mr Iqbal warned that if the business continued as usual, the positive momentum could be lost.
He stressed the need for implementing structural reforms to guide the country onto a sustainable path and achieve desired results in the long term. These policies should be maintained regardless of which government is in power, he stressed.
The planning minister is set to embark on a four-day official visit to China from Saturday to attend the 12th Joint Cooperation Committee (JCC) meeting to be held in Beijing on July 11 to mark the 10-year celebrations of CPEC.
On Wednesday, Mr Iqbal also reviewed progress over the JCC in a meeting attended by Planning Secretary Syed Zafar Ali Shah, Chief Economist and CPEC Executive Director Nadeem Javaid and representatives from relevant ministries and divisions.
During his visit to Beijing, Mr Ahasn Iqbal will underscore the importance of the Pak-China relationship and their commitment to further strengthening their strategic partnership. He will hold meetings with key Chinese officials, including those from China’s National Development and Reform Commission.
Iftikhar A. Khan, Mubarak Zeb Khan and Amin Ahmed contributed to this report
Published in Dawn, July 6th, 2023
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