Pakistan’s finance chief defends country’s 'good relations' with IMF

This file photo captured on on March 27, 2020 shows an exterior of the International Monetary Fund (IMF) Headquarters in Washington DC. (AFP)

• Opposition parties have accused government of taking forced dictation from IMF to implement its proposals
• Negotiations with IMF for third review and tranche will resume in a few weeks — Shaikh

KARACHI: The Prime Minister’s adviser on Finance, Dr. Abdul Hafeez Shaikh, defended Pakistan’s ‘good relations’ with the International Monetary Fund (IMF) during a post-budget briefing in Islamabad on Saturday, and said negotiations would resume shortly for the fund’s third review.
Shaikh’s clarification came a day after a divisive national budget was unveiled, and follows a barrage of criticism from opposition parties regarding Pakistan-IMF ties. The government has been repeatedly accused of taking dictation from the fund while making budgets.
“Lot of questions are asked about the IMF program. I want to clarify that IMF is not formed to oppress the people of Pakistan,” Shaikh said.
“We have very good relations with IMF. Pakistan and IMF relations are not such that IMF orders and Pakistan is bound, in any case, to obey,” he added.
Pakistan was approved for a $6 billion bailout program from the IMF last year and the government has been facing repeated criticism at home, with a common impression that the rigid proposals of the fund are virtually binding upon the country.
The IMF conducted its second review of the bailout program in February this year and the country now awaits its third tranche of $450 million. The fund has also extended another $1.4 billion loan at a concession to fight COVID-19.
On Saturday, Shaikh told reporters: “We have got free from the budget and in the coming weeks we will let you know about the discussion, when their (IMF’s) next review and tranche will be held.”
Pakistan on Friday presented a Rs7.14 trillion annual budget with a fiscal deficit estimate of Rs3.43 trillion or 7 percent of gross domestic product.
The government allocated Rs2.9 trillion for debt retirement in the next fiscal year while Rs2.7 trillion debt servicing was made in the outgoing year, leaving less resources for poverty alleviation efforts.
“We want to initiate more programs like Ehsaas which could be doubled or tripled but we are bound to retire our debt obligations,” Shaikh said, referring to the government’s primary poverty alleviation program. 
“The budget was made keeping in mind the COVID-19 situation where incentives have been given to industries and businesses to create more jobs.” 
In an exclusive interview with Arab News last week, the finance adviser said budget-making was “a consultative process and inputs are taken by the government from various domestic and international stakeholders.”