As Islamabad scrambles, Dar meets US ambassador to alleviate concerns on Pakistan’s budget

Federal Minister for Finance Ishaq Dar on Wednesday told US ambassador Donald Blome that the latest government’s budgetary measures for fiscal year 2023-24 are aimed at reducing the fiscal gap in order to meet national as well as international financial obligations.

The Finance Division said Dar also informed the US diplomat about the progress on the ongoing talks with the International Monetary Fund (IMF) and stated that the government is committed to completing the programme.

Earlier, Islamabad was severely criticised by the IMF with Esther Perez Ruiz, the lender’s Resident Representative for Pakistan, expressing dissatisfaction with the budget proposals announced by Dar for fiscal year 2023-24, calling them a missed opportunity to broaden the tax base while criticising the new amnesty scheme that “creates a damaging precedent”.

Following the remarks, the Ministry of Finance, in a tit-for-tat response the very next day, said the budget was “never a part of the ninth review”, a complete deviation from earlier reports that Pakistan was required to take the Washington-based lender onboard for the new taxation measures.

In its statement, the finance ministry also said that it was committed to completing the IMF programme, stalled since November last year, and was keenly engaged with the lender “to reach an amicable solution”.

The back-and-forth responses came just a few days before the bailout is scheduled to expire (June 30), and disrupted hope the crucial programme would be revived, stoking fear that Pakistan was inching closer to default on its payments.

Authorities in Islamabad are scrambling to secure dollar inflows, looking towards traditional allies to alleviate concerns over Pakistan’s economic situation. Many see Blome’s meeting with Dar as part of Islamabad’s efforts.

On Tuesday, Prime Minister Shehbaz Sharif lauded the support of China, saying that the neighbouring ally stepped up at a time of an “inordinate delay” on part of the IMF.

In his meeting, Dar welcomed Blome and “valued the deep rooted historic and durable bilateral relations with the United States on economic and trade fronts”, added the statement.

The finance minister also shared the policies and priorities of the government to address the challenging environment and set the economy on the path to stability and growth.

“The two sides also exchanged views about areas of common interest and how the existing bilateral relations between the two countries can be enhanced further,” read the statement.

The Finance Division said Blome expressed confidence in the policies and programmes of the government for economic sustainability and socio-economic uplift of the masses.

“He extended his support to further promote bilateral economic, investment and trade relations between both the countries,” it stated.