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IMF denies tying bailout to compromise on Pakistan’s nuclear capability

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  • IMF Pakistan chief issues statement on delay in agreement.
  • Says Fund has not attached any strings as reported.
  • Talks focused on balance of payment issues, says Esther Perez.

ISLAMABAD: The International Monetary Fund (IMF) has rubbished claims that the multilateral lender had attached any nuclear-programme-related strings to the revival of a bailout stalled for months despite weeks-long talks between the two sides.

The lender is yet to approve the release of $1.1 billion originally due to be disbursed in November last year, leaving Pakistan with only enough foreign exchange reserves to cover one month’s imports.

Pakistan has been hosting an IMF mission since early February to negotiate the terms of the deal, including the adoption of policy measures to manage its fiscal deficit ahead of the annual budget due around June.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.

Veteran politicians Senator Raza Rabbani and former foreign minister Shah Mahmood Qureshi had raised concerns about whether the delay in the staff-level agreement with the Fund has anything to do with the country’s strategic assets including the nuclear and missile programmes.

They have asked the government to come clear on this issue.

In a statement released to the media on Sunday, IMF resident representative in Islamabad Esther Perez Ruiz denied attaching any strings to the External Fund Facility (EFF).

“Regarding recent speculation that programme discussions with the authorities for the ninth review under the IMF-supported programme may have covered Pakistan’s nuclear weapons programme, I want to be categoric that there is absolutely no truth to this or any insinuated link between the past or current IMF supported programme and decision by any Pakistani government over its nuclear programme,” the official said.

The IMF chief further said that the discussions have exclusively focused on economic policies to solve Pakistan’s economic and balance of payments problems, in line with the Fund’s mandate for promoting macroeconomic and financial stability.

‘No compromise on nuclear, missile programme’

On Thursday, Finance Minister Ishaq Dar promised that there would be no compromise on the country’s nuclear and missile programme.

The finance minister made the statement in the Senate in response to Senator Raza Rabbani’s questions about the delay in signing the agreement with the IMF.

Rabbani regretted that the upper House of the Parliament had “neither before nor today been taken into confidence on what are the conditionalities of the IMF” for extending the loan facility to Pakistan. 

He had termed the delay “absolutely out of the ordinary, extraordinary” saying: “The question arises […] if the delay is being made because of some sort of pressure to be exerted on Pakistan’s nuclear [programme].”

In response, Ishaq Dar told the special session in categorical terms that there would be no compromise on the country’s nuclear and missile programmes. 

“Let me assure you that nobody is going to compromise anything on the nuclear or the missile programme of Pakistan… no way,” he had added. 

The minister promised the moment the staff-level agreement and EFFP (Extended Fund Facility programme) was finalised, it would be placed on the website of the finance ministry. 

He made it clear that nobody had any right to tell Pakistan what range of missiles it could have and what nuclear weapons it could possess. 

“We have to have our own deterrence, as we represent the people of Pakistan and we have to guard our national interests,” he maintained.

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Prior to the budget address, the PSX-100 index rebounds following a continuous fall for 7 straight days.

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The Pakistan Stock Exchange rebounded after a continuous decrease of 7 days and surpassed the threshold of 73,000 points, experiencing a surge of more than 500 points in the benchmark.

The PSX Tuesday experienced a decline of more than 650 points, potentially due to tax measures being considered in the federal budget for the fiscal year 2024-25.

The investors are concerned about the State Bank of Pakistan (SBP) reducing the interest rate, as well as the unresolved circular debt, which has increased to over Rs5.3 trillion.

The KSE-100 index concluded the day with significant losses, at its lowest point.

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Pakistan experiences substantial expansion in the information technology sector.

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Pakistan experienced significant development in the exports of its IT sector, reaching a total of $2.283 billion, as stated in a recent Economic Survey Report.

The increase in exports emphasized the rising global demand for IT services from Pakistan and the sector’s impact on the national economy.

The survey demonstrated that IT freelancers contributed $35 million in remittances, highlighting their significance in the IT industry.

The study data indicates a significant rise in the number of broadband and telecom customers nationwide, with broadband users reaching 135 million and telecom users growing to 194 million.

Earlier this week, the federal government has suggested a substantial 357 percent rise in the budget for the IT sector for the fiscal year 2024-25.

As to reliable sources, the Ministry of IT has been granted a budget of Rs 27.43 billion in the development budget, out of which Rs 6.28 billion has been allotted for the implementation of 15 new projects.

The government has additionally suggested allotting Rs 21.15 billion for projects that are currently in progress, as well as Rs 3.5 billion for the Digital Economy initiative.

Additional noteworthy allocations consist of Rs 1 billion for fostering innovation in the IT sector, Rs 50 million for the digitalization of the national assembly, and Rs 300 million for the implementation of smart office projects in government ministries.

The government has additionally suggested investing Rs 9.92 billion for the Islamabad Technology Development Park and Rs 6.78 billion for the creation of an IT park in Karachi. The budget additionally comprises a proposition for an allocation of Rs 1 billion for the Cybersecurity Fund for the Digital Pakistan initiative.

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Pakistan will unveil its Rs18 trillion budget today.

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The budget will be presented by Senator Muhammad Aurangzeb, the Federal Minister for Finance and Revenue, on the floor of the National Assembly.

The government sources stated that the budget will focus on alleviating the hardships faced by the people, revitalizing the agriculture sector, advancing information technology (IT), and enhancing exports.

The administration asserted that the budget will encompass not only fiscal management and revenue mobilization, but also measures for economic stabilization and growth, reduction in non-development spending, job creation, and people-friendly policies aimed at achieving socioeconomic prosperity for the country.

The preparations for the announcement of the federal budget for fiscal year 2024-25 are progressing actively and in accordance with the specified dates.

The budget is being formulated through extensive collaboration among all the departments and ministries responsible for budget-related activities, encompassing the presentation of the budget before Parliament and the initiation of the Economic Survey.

It is important to note that the budget is being presented while Pakistan is in discussions with the International Monetary Fund (IMF) for a potential package of up to $8 billion.

Finance Minister Muhammad Aurangzeb presented the Economic Survey of Pakistan 2023-24 on Tuesday. According to the survey, the country’s gross domestic product (GDP) grew by 2.38 percent, surpassing the projected objective of 2 percent.

During the launch event of the Economic Survey of Pakistan 2023-24, Federal Minister for Finance Senator Muhammad Aurangzeb stated that despite difficulties, the country has made substantial advancements in attaining macroeconomic stability. Notably, there has been a remarkable 30 percent increase in revenue collection, a decrease in the current account deficit, a reduction in inflation, and a stable currency.

The finance minister stated that this position demonstrated a significant reversal from a fragile economic state, marked by a 0.2% fall in GDP, a 29% devaluation of the rupee, and a reduction in foreign exchange reserves, which had decreased to a level sufficient to cover only two weeks of imports.

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