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FinMin Dar meets UAE envoy as Pakistan scrambles to secure IMF deal

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  • Top UAE diplomat in Pakistan calls on Finance Minister Ishaq Dar.
  • Both discuss enhancing bilateral economic and financial relations.
  • Pakistan needs friendly countries’ assurance to unlock IMF loan.

Minister for Finance and Revenue Ishaq Dar Wednesday met the United Arab Emirates (UAE) top diplomat in Pakistan as the country scrambles to unlock the stalled International Monetary Fund (IMF) programme.

The meeting comes as the IMF, according to Prime Minister Shehbaz Sharif, wants external financing commitments fulfilled from friendly countries before it releases bailout funds.

The Washington-based lender has been in talks with the Pakistani authorities since end-January to resume the $1.1 billion loan tranche held since November, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.

The IMF funding is critical for Pakistan to unlock other external financing avenues to avert a default on its obligations. The State Bank of Pakistan’s (SBP) reserves are at a critical level of $4.6 billion and cover four weeks of imports.

An IMF statement said substantial progress had been made in discussions towards policies in recent days and financial assurances were standard in IMF programs.

“All IMF program reviews require firm and credible assurances that there is sufficient financing to ensure that the borrowing member’s balance of payments is fully financed in the next 12 months, with good prospects for financing over the remainder of the program. Pakistan is no exception,” the statement to Reuters said.

Several friendly countries — including Saudi Arabia, China and the UAE — have made commitments to help Pakistan fund its balance of payments as the nation tries to avert a possible default.

IMF’s Director of Strategic Communications Julie Kozack has said that timely financial assistance from external partners is critical to support the authorities’ policy efforts and ensure the successful completion of the review with Pakistan.

In a statement, the Ministry of Finance said UAE’s ambassador to Pakistan, Hamad Obaid Ibrahim Salim Al-Zaabi, called on the finance minister in Islamabad.

The two sides exchanged views on further enhancing bilateral economic and financial relations between the two countries, the statement read.

The UAE is among Pakistan’s largest trade partners and has supported the nation financially in the past with deposits in the State Bank of Pakistan.

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The cost of a liter of petroleum increased by much to Rs 8.14.

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Prices for gasoline and high-speed diesel were raised by the government on Monday by Rs4.53 and Rs8.14, respectively, for the upcoming two weeks.

In relation to this, the ministry of finance released a notice.

Diesel now costs Rs 290.38 per litre, while petrol is now priced at Rs 293.94 per liter following the most recent increase.

Additionally, light diesel cost Rs6.54 more per litre, to Rs174.34. A 6.69% increase in price to Rs193.8 per liter was made for kerosene oil.

The impact of the developing Middle East situation and the expanding global market are the main factors contributing to the transformation.

Before the most recent spike, the price of gasoline and HSD had risen by almost $4 and $4.50 per barrel, respectively, on the global market during the previous two weeks.

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Finance Minister Aurangzeb claims that Pakistan and the IMF are talking about a new multibillion-dollar initiative.

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The South Asian country is drawing to a close a $3 billion loan program with the International Monetary Fund that lasted nine months and was intended to address a balance-of-payments crisis that had put it in danger of defaulting last summer.

Pakistan has started negotiations for a new multi-year IMF loan program for “billions” of dollars, Finance Minister Muhammad Aurangzeb said in a Washington interview, with the final $1.1 billion tranche of that arrangement likely to be approved later this month.

Aurangzeb, a former banker who started his job last month, stated, “The market confidence, the market sentiment is in much, much better shape this fiscal year.”

“We really started talking with the Fund this week to get into a larger and longer program for that reason,” he continued.

A representative for the IMF informed AFP that the organization is “currently focused on the completion of the current Stand-by Agreement program,” which is a nine-month program that is expected to be finished soon.

The spokesperson went on, “The Fund staff is prepared to start initial talks on a successor program as the new government has expressed interest in a new program.”

“Third-year curriculum”
Aurangzeb’s journey to Washington will also include attendance at the IMF and World Bank’s spring meetings, which begin in earnest on Tuesday and have two distinct goals: supporting the world’s most indebted countries and aiding governments in the fight against climate change.

The IMF’s revised World Economic Outlook will be released to coincide with the start of the meetings, which bring together academics, representatives from the private sector, civil society, finance and development ministries, and central bankers to debate the state of the global economy.

Allegations of election tampering plagued Pakistan’s February 2019 elections, resulting in the imprisonment and disqualification of opposition leader Imran Khan and the persecution of his Pakistan Tehreek-e-Insaf (PTI) party.

The unstable alliance that surfaced, headed by Shehbaz Sharif, is currently charged with bringing about an economic recovery through the imposition of several controversial austerity measures.

Aurangzeb stated, “I do believe that we will be requesting for a three year program.” “Because in my opinion, that is what we need to help carry out the structural reform agenda.”

He went on, “I do think we’ll start getting into the contours of that discussion by the time we get to the second or third week of May.”

Keeping the US-China rivalry in check
Pakistan is in a difficult situation as the two nations have started an expensive trade war because of its strong economic ties to both China and the United States.

When asked how the Sharif government intends to handle its commercial relationships with the two largest economies in the world, Aurangzeb responded, “From our perspective it has to be a and-and discussion.”

“The United States is our biggest trading partner, and it has consistently provided us with support and assistance with our investments,” he stated. Therefore, that relationship will always be extremely important to Pakistan.

He was alluding to the nearly 1,860-mile-long China-Pakistan Economic Corridor, which was built to offer China access to the Arabian Sea, when he added, “On the other side, a lot of investment, especially in infrastructure, came through CPEC.”

According to Aurangzeb, Pakistan has a “very good opportunity” to participate in the trade war on par with nations like Vietnam, whose exports to the US have increased significantly as a result of tariffs placed on some Chinese items.

He stated, “We already have a few examples of that working.” “However, we must truly scale it up.”

reform initiative

Pakistan is currently engaged in a privatization campaign to sell off its underperforming state-owned businesses (SOEs) as part of the structural reform package agreed upon by the previous government.

The nation’s flag carrier, Pakistan International Airlines, is the first SOE on the list.

In regards to potential bidder interest, Aurangzeb stated, “we will find out in the next month or so.”

He said, “Our goal is to proceed with that privatization and see it through to completion by the end of June.”

Other businesses may soon follow if the government’s privatization of the PIA proceeds smoothly.

He declared, “We’re building a whole pipeline,” and added, “We want to really accelerate that over the next couple of years.”

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Owners of oil tankers stop the provision of fuel in favour of their demands.

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The Association declared on Monday that, in response to what it deemed to be an “unfair” measurement by the relevant authorities, gasoline delivery will stay suspended as of Tuesday.

According to the Oil Tankers Owners’ Association, they attempted to resolve their complaints with Deputy Commissioner Islamabad and Pakistan State Oil (PSO), but to no effect.

The Oil Tankers Owners Association has yelled slogans in support of their demand while parking their containers in the PSO depot.

The owners of oil tankers declared that they would not end their strike until their demands were met, accusing the administration of being to blame for the fuel crisis.

The association requested that the authorities abide by their requests, which included filling under a metered system. It further stated that the deal reached on February 20 had been broken by the authorities.

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