The Finance Minister of Pakistan Shaukat Tarin who was the one to negotiate the final installment of the IMF loan, currently IMF loan, is hoping at a budget deficit of five percent -5.25 percent of the gross domestic product for the fiscal year that begins on July 1 – down from 6.1 percent, and an increase in the rate of GDP growth of 6%, up from the current 5%, the international business news outlet Bloomberg said.
When he was in an interview in Islamabad with Bloomberg, Tarin said, “I think this program ought to suffice”. He also said that if we could generate healthy growth between 5% and 6 that means sustainable growth, then he doesn’t think that we need an additional IMF program.
The promise of an IMF-free tomorrow comes after the lender decided this week to revive the loan program of $6 billion which was suspended since 2019 , due to Pakistan’s inability to meet the loan requirements, the report said.
Tarin informed an agency for business that the Prime Premier Imran Khan is a vocal opponent for IMF bailouts, saying”the begging bowl had to be smashed” to ensure that Pakistan wants to be able to win international recognition. In its quest to become self-sufficient in the sense of IMF assistance and loans, Pakistan also favors commercial loans or bilateral loans that are not tied to the strictest of austerity standards.
Tarin has also said during the conversation that he plans to raise $1 billion by March via an ESG-compliant Eurobond. This will follow on from a similar amount of Sukuk this week.
In the study Tarin declared that the initial step to stop Pakistan’s boom-bust cycle was to boost exports. Central bank offered low-interest loans for manufacturers and tariffs for energy were made in line to regional standards. Textile exports are responsible for more than half of all exports are projected to rise by to 40% in the coming year, reaching an all-time high of $21 billion, and then to reach $26 billion in the next year, according to the PM’s trade advisor.
Furthermore, Pakistan intends to offer similar incentives to technology companies to take advantage of an international wave of venture capitalist interest in the field of startups. Tarin predicted that the measures are expected to be introduced within one month.
Since his appointment in April 2021, Tarin has renegotiated several of the financial terms of the IMF which include a less significant increase in the cost of utilities and a less tax mop-up rate than the lender was previously demanding.
The government has also implemented a number of the structural requirements which include increasing the authority of the central bank and end the deficit monetization. Tarin as his predecessors, was in a position to significantly increase the revenue base of Pakistan, or to sell state-owned enterprises that have lost money as the report states.
Tarin said to Bloomberg that the previous governments had were able to accept IMF conditions for the short-term However, once the IMF’s programme is over, policymakers return to spending. Instead it was said, the budget that follows will “control the expenditure of our government”
“We are working to adopt those measures, which will place this economy on an sustainable growth path that is inclusive and sustainable,” Tarin explained. “Once it has gained momentum and becomes sustainable, I would expect to witness twenty to thirty years of economic growth.”
IMF approves loan tranche of $1 billion for Pakistan
The International Monetary Fund’s (IMF) Executive Board has given approval to one billion dollars tranche of loans they have in their program in Pakistan, Geo News reported on Wednesday.
On Twitter, the Federal Minister of Finance along with Revenue Shaukat Tarin revealed the information.
“I am happy to announce that the IMF Board has approved 6th tranche of their program in Pakistan,” he wrote.
The IMF’s Executive Board held a meeting on Wednesday in Washington DC to consider Pakistan’s request to complete the sixth review, and to approve the release of one billion dollars of the tranche that is part of the Extended Fund Facility (EFF).
To meet a different requirement of the IMF the government achieved success in getting it to get the State Bank (Amendment) Bill 2021 cleared by Parliament’s Upper House of Parliament -this was the last obstacle to reviving the program that was in limbo.
After the approval of the bill all previous requirements of the Fund were fulfilled by Pakistan and included the approval of the mini-budget as well as the SBP bill.
In light of the demands from Pakistan in mind, the IMF delayed it’s Executive Board meetings thrice last month.
The IMF board meeting was postponed the this time, between January 28 and February 2 2022. The loan program had been in limbo in April of 2021.
The following revision (seventh) within the $6.5 billion EFF program is scheduled to be completed by April 20, 2022. The eighth and final review is scheduled to be completed in September 2022.