Pakistan’s finance chief wants to end IMF reliance through ‘sustainable growth’

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, on October 12, 2018. (REUTERS/File)

• The international lending agency revived Pakistan’s $6 billion loan program on Wednesday after getting a nod from its executive board
• Shaukat Tarin tells an international media outlet the country hopes ‘to spur economic growth to 6 percent from 5 percent’

ISLAMABAD: Pakistan’s finance chief Shaukat Tarin has said his country can end its reliance on International Monetary Fund (IMF) by generating sustainable growth of five to six percent, reported an international media outlet on Thursday after conducting an exclusive interview with him in Islamabad.
The IMF revived Pakistan’s $6 billion loan program on Wednesday after the government met its key conditions, including parliamentary backing for the central bank’s autonomy, uniform implementation of sales tax, and increase in power tariffs.
The loan was offered to the country in July 2019 under the international lending agency’s Extended Fund Facility after Pakistan accepted its condition to undertake structural reforms and allow periodic performance reviews.
Tarn announced the resumption of loan package in a Twitter post on Wednesday night, saying he was pleased that the IMF executive board had approved the sixth tranche of the program that was stalled due to difference of opinions on both sides.
“I think this program should be enough,” he told Bloomberg in an interview published on Thursday. “If we start generating 5 percent-6 percent balanced growth, which means sustainable growth, then I don’t think we need another IMF program.”
The international financial publication noted that Pakistan had sought nearly 20 IMF bailouts in about half a century, though it was now hoping to stand on its own feet “by shrinking deficits and tapping capital markets.”
“Finance Minister Shaukat Tarin, who negotiated the last leg of its current IMF loan, is targeting a budget shortfall to 5 percent-5.25 percent of gross domestic product in the year starting July 1, from 6.1 percent now, and aims to spur economic growth to 6 percent from 5 percent,” it added.
Tarin also told Bloomberg that he planned to raise $1 billion through an ESG-compliant Eurobond in March after generating the same amount through Sukuk last week.
The IMF has already expressed hope that the country’s economy would continue to recover despite the COVID-19 pandemic, though it has also warned that “imbalances have widened and risks remain elevated.”
“The authorities’ recent policy efforts to strengthen economic resilience are welcomed,” IMF Deputy Managing Director Antoinette Sayeh said in a statement, adding: “Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth.”
The multilateral lending agency maintained Pakistan’s growth was expected to reach four percent, though it cautioned the economy remained vulnerable to disruptions from the pandemic and geopolitical tensions.