Nearing default and lying about phone calls? Not good Pakistan, says IMF

The International Monetary Fund (IMF) stated on Sunday that Managing Director Kristalina Georgieva and Prime Minister Shehbaz Sharif spoke on the latter’s request, a claim that suggests Islamabad has continued to engage in politics while being on the verge of default.

“The call took place in response to a request by the Prime Minister of Pakistan to discuss the International Conference on resilient Pakistan,” Esther Perez, the resident representative of the IMF told The Express Tribune.

On Friday, the PM’s office issued an official handout stating that “the IMF managing director phoned premier Shehbaz on the phone” following his address at the Hazara Electric Supply Company’s (HAZECO) inaugural ceremony. The PM had also stated in his address that the managing director of the Fund had called him.

As the country makes dubious claims of strength and has just $4.5 billion in foreign exchange reserves, it appears that the administration is still not ready to change its ways.

Only three weeks’ worth of imports may be covered using the remaining funds. Pakistan has paid back $8.5 billion in debt during the past three months (January through March). Included in this is a $2 billion loan to the UAE for which the government is attempting to obtain a rollover.

Given the long-standing animosity between the two parties, such factually erroneous claims might make it harder for Pakistan to persuade the IMF.

Due to its propensity to make pledges while receiving a loan tranche but then break them after the tranche has been released, the country has had a rough history with the IMF. This has led to a significant gap.

A spokesperson of the IMF in a statement to the media also said that “the Managing Director had a constructive call with Prime Minister Sharif in the context of the International Conference on Resilient Pakistan to be held in Geneva on Monday, January 9.”

The MD once more conveyed her sympathies to those who were directly impacted by the floods, and it was also said that she backed Pakistan’s attempts to create a more robust recovery.

Additionally, the PM asserted on Friday that an IMF delegation will visit Pakistan in a matter of two to three days.

“I asked her to send an IMF team for the completion of the pending 9th review of the programme so that the next loan tranche is released. She assured that the mission will visit [Pakistan] in the next two to three days,” Shehbaz had said.

However, in its statement to the media, the IMF spokesperson said that the IMF “delegation is expected to meet with Finance Minister Ishaq Dar on the sidelines of the Geneva conference to discuss outstanding issues and the path forward”.

The self-claimed deadline, which ends on Monday, for the 9th review mission’s arrival in Pakistan was not mentioned in the statement.

On Saturday, it was revealed that due to significant debt repayments, Pakistan’s official foreign exchange reserves have for the first time dropped to a perilous level of $4.5 billion.

The sources in the finance ministry also stated that no dates for the IMF review mission had been decided upon as of the PM’s address.

Additionally, the prime minister said that Georgieva had asked if Saudi Arabia and China were aiding Pakistan.

After thereafter, Pakistan’s interior minister Rana Sanullah said that even foreign countries won’t assist without the IMF’s protection.

“If we back out from these [IMF] conditionalities, then our economic survival will become next to impossible and even our friendly countries cannot extend financial help to us,” Sanaullah had said in Faisalabad.

The interior minister had said that if the current administration tried to adhere to the strict requirements of the IMF, inflation would soar, prices would soar, and the economy would suffer.

Since the 9th review negotiations between Islamabad and the Fund have not concluded as of yet, a $1.1 billion loan tranche has been withheld.

In order for the World Bank and the Asian Infrastructure Investment Bank (AIIB) to disburse their funds, Pakistan is eager to finish the ninth review.

Disagreements about import restrictions, currency rate regulations, demands for the imposition of more taxes, and raising energy costs to pay off over Rs500 billion in circular debts have caused the discussions to be postponed.