IMF staff mission in Pakistan takes stock of financial situation

The IMF mission is assessing Pakistan’s economic situation in broader terms including the debt stock of the energy sector, the China-Pakistan Economic Corridor (CPEC), and privatization of the country’s loss-making entities in the public sector. (REUTERS)

• Pakistan is not negotiating a loan program with the IMF team; approaching IMF is the last resort, officials say
• The IMF staff mission, led by senior economist Herald Finger, arrived in Pakistan on Sept. 27 and is expected to return on Oct. 4

KARACHI: Pakistan and the International Monetary Fund (IMF) mission are engaged in information sharing about the country’s financial position as the country is expected to approach IMF as a last resort, officials say.
“The visiting delegation of the IMF is taking stock of the economic and financial conditions of the country as per a routine measure. The government is apprising the delegation about its priorities and future economic plans for securing external financing,” Senator Muhammad Ayub told Arab News.
The IMF staff mission, led by senior economist Herald Finger, arrived in Pakistan on Sept. 27 and is expected to return on Oct. 4.
The delegation has so far met with the country’s top authorities, including Finance Minister Asad Umar and officials of the Ministry of Commerce.
The visiting mission is assessing the country’s economic situation in broader terms including the debt stock of the energy sector, the China-Pakistan Economic Corridor (CPEC), and privatization of the country’s loss- making entities in the public sector. “The government is sharing its plans of securing financing from other sources including friendly countries,” Ayub said.
“The government is also sharing details about steps being taken to reduce the fiscal and budget deficits. The government is not negotiating any loan program,” he added.
Pakistan’s Finance Minister Asad Umar, in an interview with Arab News, categorically dispelled the impression that the country was in any fiscal emergency to rush for the IMF program. “We are in discussions with them, but this is not to negotiate for a loan. Our purpose is to do our homework, in case we want to approach them at some stage,” Umar told Arab News.
About the steps to reduce the balance of payment deficit, the finance minister said that the government is working to eliminate the root cause of the deficit.
As the government remains indecisive about approaching the international lender, the UN Conference on Trade and Development (UNCTAD) said that the country had no choice: “Expectations are that the new government has no choice but to turn to the IMF for a large loan, which would require adopting austerity measures that are likely to affect growth adversely. Over the medium term, much will depend on whether large infrastructure projects will support a stronger export push.”
The government’s advisers stressed the need to take a clear stand about the IMF. “The government must clearly decide yes or no so that the uncertainty should end,” Dr. Ashfaque Hasan Khan, a member of the Economic Advisory Council (EAC), told Arab News.
Discussions with the IMF delegation remain pivatol to the country’s privatization program, which remained at a standstill during the tenure of the outgoing government. The current Pakistan Tehreek-e-Insaf (PTI) government is particularly focusing on the state of public sector institutions, which are running at losses and are a huge burden on the national exchequer.
“We are focusing on improving the health of the country’s loss-making entities before embarking on the privatization program because we expect that the government will not be in position to secure the right price for the sick entities,” said Ayub, who is also a member of the Senate’s committee on industries and production.
“The government seems serious about carrying on the privatization of the country’s sick industrial units,” Mir Muhammad Yousaf Badini, chairman of the senate’s committee on privatization, told Arab News. “The government will brief about its plans on Oct. 3 following meetings with the IMF delegation,” he said.
Pakistan has so far completed 172 transactions and privatization proceeds raised through these transactions stand at 648.6 billion Pakistani rupees. About 69 entities are available for privatization including Pakistan Steel Mills, Pakistan International Airlines (PIA), gas and a number of electricity distribution companies, according to the Privatization Commission of Pakistan.