Prime Minister Shehbaz Sharif on Thursday personally reached out to International Monetary Fund (IMF) Managing Director Kristalina Georgieva and implored her to relax conditions regarding energy price increases and the imposition of new taxes.
The phone call came a few days ahead of a face-to-face meeting between the premier and the head of the IMF, which is expected to take place on the sidelines of the Geneva Conference, reported Express Tribune.
The premier has requested the IMF managing director to reconsider the imposition of new taxes and the recovery of Rs. 500 billion in circular debt losses, some of the major impediments to reaching an initial agreement for an IMF staff visit to Pakistan. It is unclear whether the IMF official promised to make any concessions.
According to Bloomberg, the PM said the lender has assured a team will visit the South Asian nation for a review of the economy. “We will try our best to fully comply with all the (IMF) conditions,” Sharif said while talking to the MD on phone yesterday, adding that she will send the team within the next two-three days.
In any case, Shehbaz Sharif’s call to the IMF executive indicates that the finance ministry has failed to woo the lender to play a few cards in Pakistan’s favor.
In what emerged to be an alternative to the IMF, Finance Minister Ishaq Dar earlier expressed hope for a $3 billion second bailout from Saudi Arabia within days, vowing to raise funds through the sale of assets to supplement the critically low foreign exchange reserves. However, Saudi cash assistance can only postpone the default; it cannot solve the problem indefinitely.
Meanwhile, the government estimates disbursements of USD 103 billion during the next three years to finance the repayments and the current account deficit using a combination of bilateral, private debt, and multilateral flows. To unlock these flows, it is pertinent that Pakistan stays engaged with the IMF for the long term.
In line with the conditions set forth in the recent IMF negotiations, the government has reluctantly agreed to contingency measures to increase tax revenue, but without a small breather to help with the internal pressures, the move is expected to keep the government on its toes for the remainder of this fiscal year.
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Such a tight situation and still the government lacks seriousness to ban luxury imports, prioritise austerity, and stop smuggling of dollar outside of the country. Unless we plug the holes in the bucket, we will have to keep filling from top again and again.