Federal Minister for Finance Shaukat Tarin on Wednesday expressed hope that top-level negotiations between Pakistan and the International Monetary Fund (IMF) would be successful and the $6 billion Extended Fund Facility (EFF) would be put back on track.
“I believe that the progress we have made to date is really encouraging and as we say, God willing, I see this happening now in this visit,” he said in an interview at the United States Institute of Peace.
The minister said that the concluding sixth round of talks with the IMF was the most important part of his visit to the US, adding that many virtual meetings had already taken place while the technical level discussions had also concluded.
He said, at the final stage, meetings would be held with seniors at the IMF, including the Fund’s managing director.
The minister said his government believed that IMF’s demand to increase power tariffs would trigger inflation, adding that this point was made in the technical discussion with the Fund, which was also informed that the increase in tariff would be made in a gradual manner so that it does not have an abrupt impact on inflation.
Tarin said that there were some problems in the power sector, including excess capacity, for which the government had to pay, adding that the performance of distribution and generation companies was also being improved. He said all this was being successfully negotiated with the IMF.
The minister said that there was no stagnation in growth and the Pakistani economy would grow by over five per cent during the fiscal year 2021-22.
He said that back in the 1960s, Pakistan’s economy was the fourth-largest in Asia. However, Zulfiqar Ali Bhutto’s nationalisation policy and the Afghan war in 1979 disrupted economic growth, he added.
Tarin said Prime Minister Imran Khan took over an economy that was struggling in 2018 with a $20bn current account deficit, unsustainable fiscal deficit, adding that the premier had to go for a tough IMF programme besides taking some politically unpopular decisions including currency devaluation, increasing the discount rate and increasing utility prices.
The minister said that as the country’s economy started consolidating and growing, the Covid-19 pandemic hit the world.
However, it was skillfully dealt with by the government as was indicated by the far lesser human and economic losses caused by the pandemic in Pakistan compared to the rest of the world. He said the government kept investing in two productive sectors, agriculture and industry, as well as housing during Covid-19.