Finance Minister Shaukat Tarin, fresh from negotiations with the International Monetary Fund (IMF) that approved the latest tranche of the $6-billion Extended Fund Facility (EFF), has said that the current programme “should be enough”, reported Bloomberg on Thursday.
The report comes after Pakistan saw the Washington-based lender agree to the steps taken by the economy since a staff-level agreement was reached in November.
The IMF Board meeting, held more than 2 months after the staff-level agreement, was delayed on more than one occasion as Pakistan scrambled to meet conditions set forth by the lender.
Among them was passage of the State Bank of Pakistan (SBP) (Amendment) Bill, 2021 and approval of a ‘mini-budget’ that saw withdrawal of sales tax exemptions to the tune of Rs343 billion.
The opposition widely criticised the government for the two bills, and came down hard on the ruling political party that has for long argued that it wants to end reliance on the IMF.
“I think this programme should be enough,” Tarin was quoted as saying by Bloomberg. “If we start generating 5%-6% balanced growth, which means sustainable growth, then I don’t think we need another IMF programme.”
The finance minister, who has stated several times that IMF conditions were tough, is targeting a budget shortfall to 5%-5.25% of gross domestic product in the year starting July 1, from 6.1% now, and aims to spur economic growth to 6% from 5%, added the report.
Tarin also said that he plans to raise $1 billion via an ESG-compliant Eurobond in March, which would follow a similar amount of Sukuk last week.
Apart from tapping international markets, Tarin said that the government plans to extend incentives to the technology sector, hoping to ride on the bullish sentiment that saw Pakistan attract a record amount of investment in its startups last year.
The policies could be unveiled in about a month, Tarin told Bloomberg.
Tarin also said the deficit would be kept in check, vowing to “control our expenses” in the upcoming budget, a statement that is in contrast to last-year’s sentiment.
“We are trying to now take those steps, which are going to put this economy on an inclusive and sustainable growth path,” said Tarin. “Once it gathers momentum and is sustainable, then I think we will probably see 20-30 years of growth.”
PM's China visit
Meanwhile, in a separate video message, Tarin termed the IMF approval a “welcome development”, which would bring much-needed economic stability.
He added Prime Minister Imran Khan, in his visit to China, would urge the ally to relocate its industries to Pakistan.
“The approval of IMF tranche is a welcome development for Pakistan’s economy,” said Tarin.
“This means that the IMF agrees with our current economic strategy, and the latest approval would bring much-needed improvement and stability to our economy and currency.
“Secondly, the premier’s trip to China is very important, both politically and economically. We are going there to seek Chinese help, hoping that they relocate their industries to Pakistan as well.
“Our Special Economic Zones (SEZ) are ready and the relocation would be a win-win situation.”
Furthermore, Prime Minister Imran Khan would also ask China to help in the Agriculture Transformation Plan, said the finance minister. “Agriculture has a very important position in our economy, and the growth of this sector leads to economic growth,” he said.
While in Beijing, the PM would also meet prominent business leaders of China and representatives of leading Chinese think-tanks, academia and the media. He will also have other bilateral interactions on the sidelines.
This report was first published in Business Recorder on Feb 3, 2022.