Finance Minister Asad Umar to hold crucial talks with International Monetary Fund on bailout

Cornelia Mascio
Febbraio 10, 2019

ISLAMABAD: Prime Minister Imran Khan on the invitation of Vice President, Prime Minister of the United Arab Emirates and Ruler of Dubai Sheikh Mohammad Bin Rashid Al-Maktoum, Sunday left for Dubai on a day long visit where he would participate in 7th edition of the World Government Summit (WGS).

He explained that bad governance has created a lot of problems now being faced by the country.

We don't want a deal that compromises Pakistan's progress, said the information minister.

The prime minister will also meet the UAE leadership during the summit. It's with the conditions that go along with the financial aid package, he said.

The IMF is asking for an adjustment of around Rs1,600-2,000 billion over three to four years. He is also expected to highlight his vision for a strong and prosperous Pakistan to encourage investment in the different sectors of Pakistan economy.

But the stumbling issue in the talks is the pace of adjustments in the current expenditure.

According to the official, there is some space for cut in certain expenditures where Pakistan is in a comfortable position.

"This agreement in cut will pave way for accession to the programme", the official claimed, adding that it will be a politically hard decision.

The IMF has been demanding that the burden of any expenditure cuts should fall on current expenditures that include debt service, defence and subsidies.

Lagarde said the uncertainty in the growth outlook for oil exporters also reflected moves by countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris climate change pact. It tests whether the path of debt accumulation of any country is sustainable or not.

Cutting the primary deficit requires a cut in current expenditures, and usually becomes necessary when reducing debt-to-GDP ratio is a priority.

According to Najeeb, the government has already taken several policy measures including an increase in interest rate, gas and electricity tariffs along with revenue measures.

The FBR has been asked to take administrative measures including revival of tax on mobile phone cards to cover up the shortfall in reaching the budgetary target.

Lagarde also said across the region, it is common for sovereign wealth funds to directly finance projects, bypassing the normal budget process, while state-owned enterprises in some countries had high levels of borrowing, outside the budget.

International Monetary Fund chief Christine Lagarde has already arrived in Dubai to participate in the fourth Arab Economic Forum where the finance minister will holding a meeting with them.

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