Pakistan was expected to get $4 billion over the next year from the International Monetary Fund, Finance Minister Miftah Ismail said as the country seeks a bailout package to support its ailing economy. The rupee has depreciated in the recent past in the wake of political developments in Punjab.
“As for the IMF programme, the staff-level agreement will now envisage the program to extend for another year and also augment the amount by a billion dollars,” he said while addressing a ceremony in Islamabad.
Moody’s Investors Service and Fitch Ratings said they expect Pakistan to secure the $1.2 billion bailout from the global lender, Krisjanis Krustins, a Hong Kong-based director at Fitch, was quoted as saying by Bloomberg on Wednesday.
Highlights of the presser
Revise privatization laws as incumbent one has not succeeded for years. Some companies have not been able to privatize for 15 years, one other hasn’t been able to do so for 36.
Prior conditions of IMF included: the passing of the budget, signing of MOUs, increasing petroleum levy, power tariffs, and some other conditions regarding interest rates, long-term financing facility and export financing scheme.
Petrol levy will increase according to schedule; currently, there is an Rs5 levy on diesel, Rs10 on petrol and no sales tax.
He claimed that power tariffs have not changed over more than years so the government has decided to revise the policy for July. It has also approved the revision of tariffs for July and October.
Talks with IMF
The government had talked about anti-corruption laws with the IMF though those are not part of prior conditions. “I suggested investigating whether these laws can or have been used to persecute political opponents and whether there is a trade-off between efficiency of government and anti-corruption laws.”
The “benchmark was about forming a team” which would do a diagnostic analysis of anti-corruption laws in Pakistan, he said, adding: “We will constitute the commission of best experts around the world.”
“Getting aid from friendly countries is not part of prior conditions either, though we have some countries willing to buy our shares and our power plants in Haweli and Bahadurshah.”
Some countries were also willing to give the country energy on credit, he said, reiterating that the government would be able to fill the $4 billion financing gap over the next year.
“We are also lifting the ban from certain imported goods like pet foods etc,” he said, “but, we’re adding some prior registration conditions on imports of certain raw materials and machinery.”
Miftah claimed that some companies and people had started hoarding petrol when the government was subsidizing the fuel.
“Now we have more petrol in stock than we used to have before. We have 42 days of diesel as compared to six; 30 days of motor gas as compared to 10. We will not be importing petrol, gas etc in the next few weeks.”
He was of the view that such policies would contract the demand and will bring down imports. “We will have more inflow of dollars than outflows.”
“We’ve controlled the situation, however, and expect higher exports and remittances compared to imports,” he said, “This is a temporary measure, I want the demand and economy to grow. Specifically, we need inclusive and sustainable growth.”