Pakistan does not need IMF loans: Finance Minister

Dr Abdul Hafeez ShaikhISLAMABAD:  Federal Minister for Finance, Dr Abdul Hafeez Shaikh said that Pakistan would not require loans from the International Monetary Fund (IMF) as it would go ahead with its own reform programme to enhance the economic sustainability.

In an interview with London-based Financial Times, the federal minister said Pakistan had decided not to negotiate a new programme with IMF and would instead go ahead with its own reform programme.He said the IMF’s demands had become too tough and the government would instead press ahead with a homegrown fiscal reform programme.”We need to signal to the world our continued commitment to reforms and to pursuing a series of steps required to remain financially disciplined,” Mr Shaikh said adding “We want to achieve the kind of benchmarks we have set in our own domestic reforms programme. This is a government that wishes to be serious about fiscal restraint.”

Pakistan negotiated an $11.3bn loan package from the IMF three years ago to avoid a balance of payments crisis. Disagreements over fiscal management led to the programme’s effective suspension at the end of last year.The Financial Times reported that Pakistan’s government has forfeited the final $3.7bn tranche of a three-year-old International Monetary Fund programme after some disagreements over fiscal reforms, according to the country’s finance minister.

According to the newspaper, Adnan Mazarei, the IMF’s mission chief for Pakistan, is expected to lead an IMF delegation to visit Islamabad on November 10, even as Paul Ross, the IMF’s representative in Islamabad, is expected to return to Washington.”What we need in the coming period, very quickly and very clearly, is a strengthening of the budgetary position,” Mr Mazarei told a local TV network. “There have been some structural reforms and the government has taken some steps but much more is needed.”

The newspaper reported that the end of the IMF programme means Pakistan will have to start repaying its loan early next year, with the first $1.2bn payment likely to eat into the country’s $ 18 bn in foreign reserves. Shaikh, however, is convinced that the economy is stabilizing, buoyed by exports and remittances.According to the report, Shaikh was upbeat about Islamabad’s ability to meet current account and deficit targets, set respectively at 2 and 4 per cent of GDP, while also widening the country’s tax base by bringing an extra 300,000 people into the tax net. At present only about one per cent of the 180m population pay income tax. – Brecorder