IMF’s ingenious approach the only hurdle to bailout

ISLAMABAD: Minister of State for Finance Dr Aisha Ghaus-Pasha said on Wednesday that staff-level agreement on the 9th review was taking time because the International Monetary Fund (IMF) wants to independently verify commitments from friendly countries – Saudi Arabia and the United Arab Emirates.

She said this while briefing the Senate Standing Committee on Finance meeting presided over by Senator Saleem Mandviwala.

Soon after the proceeding of the committee started, Senator Mohsin Aziz inquired from the minister about the status and fate of the IMF programme. He wanted to know why there was a delay in the completion of the 9th review after taking tough decisions that led to skyrocketing inflation, unemployment, and closure of industries in the country.

IMF talks: ‘Some understanding’ reached: MoS Pasha

The minister said that the situation is extraordinary and required structural reforms as it is not being bundled by routine matters. She added that the government after coming to power revived the IMF programme and took tough decisions but because of the trust deficit between the IMF and the country due to the past history, the Fund wanted to comply with all the prior actions.

Thus, the government has taken all the prior action including Rs170 billion tax measures to absorb subsidy provided to the power sector, as well as, the gas and power tariff increase, the minister added.

She said that all the major measures have been taken and only external financing issue is pending and it is time-consuming because IMF wanted to independently verify from the friendly countries.

The minister claimed that lately some progress was made last night in this regard and hopefully there would be positive news from friendly countries.

She said that China has come through for Pakistan and now it is being expected that Saudi Arabia and the UAE to come through for Pakistan. She said that all the countries have helped Pakistan and structural reforms have to be taken and the country cannot keep on providing subsidies to everyone.

She said that the IMF wanted that targeted subsidies to the lowest segment should be provided and the tendency of other subsidies should be done away with. She said that business as usual cannot be continued and structural reforms have to be made. She claimed that all the three countries have extended full support in this regard.

About subsidy on petrol, she said that no subsidy has been provided so far on petrol. She said that an idea in this regard was floated by the Petroleum Division and its designing and administration is being worked out and if it is targeted without being misused then the Fund would have no issue.

She said that nothing has yet been worked out about subsidy on petrol.

However, Farooq H Naek said that the government should think about food subsidy and deplored that no work on population is being done and agriculture yield is decreasing.

He wanted to know whether the government has thought about the food programme and population.

He added that poor people have no flour and the government instead of making them beggars should make them a partner by providing them food subsidy.

The committee members also expressed concern over the loss of precious lives during wheat flour (atta) distribution and stated this is the most disorganised scheme.

However, Aisha Ghaus Pasha said that this is one of the areas of government’s top priority and unless productivity is not increased there would be a serious problem.

On the issue of State Bank’s inquiry into banks scams for charging extra US$ from customers for the opening of LCs, the officials of the SBP informed the committee that an investigation has been concluded and the SBP is in deliberations with the Finance Division to determine whether the action should be on fiscal end or regulatory. He assured the committee that action will be taken soon.

Senator Saleem Mandviwala inquired about the current situation of LCs being opened by banks and claimed that plenty of complaints have been received in which banks have refused to make payments even after the opening of LCs. Officials of the SBP apprised the committee that the SBP is monitoring the situation and banks are being establishing LCs for all the necessary items which have been prioritised.

Copyright Business Recorder, 2023