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IMF to ‘remain engaged’ with Pakistan despite political tumult

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  • “Pakistan authorities have committed not to introduce fuel cross-subsidy,” IMF says.
  • Fund says it sees no indication that Pakistan wants to pause negotiations.
  • Political crisis in the wake of Imran Khan’s arrest have sparked concerns about IMF programme.

Amid speculations that Pakistan’s chances of clinching a long-suspended International Monetary Fund (IMF) bailout have been reduced due to the political situation, the lender clarified that it “remains engaged” with Islamabad, Bloomberg reported Thursday.

Declining to comment on the arrest of former prime minister Imran Khan, the spokesperson of the global lender said: “IMF remains engaged with Pakistan on securing funding and policy assurances with the goal of reaching an agreement on the ninth review of the $6.7 billion loan agreed in 2019.”

“The IMF sees no indication that Pakistan wants to pause negotiations on disbursement from the current programme,” the spokesperson told the foreign publication.

Following the arrest of the Pakistan Tehreek-e-Insaf (PTI) chairman, concerns sparked that Pakistan was edging closer to a default as political unrest will delay an IMF bailout.

“It looks increasingly difficult for Pakistan to avoid a default in the absence of fresh funding support coming in,” said Eng Tat Low, an emerging-market sovereign analyst at Columbia Threadneedle Investments in Singapore.

“I am also growing more skeptical whether an IMF deal is going to come through. Their heavy debt amortisation against precarious reserves would suggest default is imminent,” he added.

Violent protests erupted in Pakistan on Tuesday with dozens injured across several cities and demonstrators attacking military buildings after Khan was arrested. Moreover, the police initiated a crackdown and arrested the top leadership of the party along with thousands of workers.

The rupee slumped to a record low and slid over 3% a dollar on Thursday. Dollar bonds due 2031 fell to the lowest since November and were indicated at 33.10 cents on the dollar.

‘No petrol subsidy’

Moreover, the Fund also revealed that Pakistani authorities have committed to the lender that petrol subsidy would not be introduced.

“Pakistan authorities have committed not to introduce fuel cross-subsidy scheme in F23 [fiscal year 2022-23] and beyond,” the spokesperson said.

The statement comes as a surprise as Minister of State for Petroleum Dr Musadik Malik, on Tuesday, said that Pakistan aims to address IMF’s concerns before implementing its new fuel subsidy plan.

“The IMF had some reservations about the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people”, he said on Bloomberg TV in an interview.

Malik said: “We originally thought that it was a much simpler idea. We want to make sure now that if we move forward, we take care of their concerns and make sure that they completely understand what we are trying to do and why.”

However, the Washington-based lender has now said that Pakistan has already committed to the Fund that it would not introduce the subsidy.

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Donald Lu visits Finance Minister Aurangzeb at the World Bank headquarters.

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Wednesday saw Minister for Finance and Revenue Muhammad Aurangzeb meet US Assistant Secretary of State for South and Central Asian Affairs Donald Lu and Principal Deputy Assistant Secretary Elizabeth Horst.

The finance minister briefed US officials on Pakistan’s reform plan at the World Bank. Meeting both delegations decided to improve bilateral ties.

Meeting topics included alternative energy, agriculture, climate, and tech industry. Boosting the Pakistan-US economic partnership was another finance ministry priority.

With US officials, Pakistan’s Finance Minister Muhammad Aurangzeb addressed IT, agriculture, and other business potential.

Pakistan would collaborate with the US International Development Finance Corporation and Exim Bank, according to Muhammad Aurangzeb.

His name is Donald Lu.
Over 30 years of US government service for Lu as a foreign service officer.

What Pakistan calls the “cipher” dispute involves the American official. The Pakistan Tehreek-e-Insaf (PTI) founder claimed that a supposed official letter between Washington and Islamabad proved his ousting as PM was a US conspiracy.

Washington has strongly refuted Khan’s allegations.

The State Department’s top South and Central Asia diplomat is Donald Lu, assistant secretary of state.

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Huge investment potential exists in the telecom and IT sectors. Shaza Fatima

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According to Shaza Fatima Khawaja, Minister of State for IT and Telecommunication, there are numerous investment prospects in Pakistan’s IT and telecom sectors.

She noted that the current administration is dedicated to fostering foreign investment in the nation, in line with the Prime Minister’s goal.

According to a news release, CEOs Wateen Adil Rashid and Muhammad Shahbaz Khan of Taavun (Pvt) Limited, who paid her a visit on Tuesday, spoke with Minister of State for IT and Telecommunication Shaza Fatima Khawaja.

She declared that the private sector would receive complete support because it is essential to growing our exports.

Regarding youngsters, she stated that they are our greatest asset and that efforts are being made to further their growth.

Sheikh Nahyan bin Mubarak Al Nahyan of the United Arab Emirates was thanked by Shaza Fatima for his particular interest in promoting additional investment in Pakistan’s telecom industry.

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WB pledges complete support for changes aimed at stabilizing Pakistan’s economy.

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Federal Minister for Finance and Revenue, Muhammad Aurangzeb, met with President of the World Bank Group, Ajay Banga, according to a press release from the ministry of finance here. During the meeting, the minister discussed Pakistan’s progress under the nine-month Standby Arrangement (SBA) program as well as ongoing reforms in priority areas of taxation, energy, and privatization.

According to the statement, the minister also extended an invitation to the president to visit Pakistan, and both parties acknowledged the necessity of a rolling 10-year country framework plan.

The minister also talked on safeguarding Pakistan’s eligibility for concessional funding and future project pipeline during a meeting with Masatsugu Asakawa, President of the Asian Development Bank (ADB).

The chief executive officer of the US International Development Finance Corporation (DFC), Scott Nathan, also met with the minister of finance.

They discussed during the conference how DFC may increase its investments in Pakistan after resolving unresolved conflicts in a cooperative manner.

According to the minister, the government is supporting creative financing strategies to maximize PPP potential and private sector participation.

According to the statement, he gave his word that the government will do everything in its power to assist investment projects by both foreign and local businesses in Pakistan.

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