Pakistan’s Finance Minister Ishaq Dar Blames Geopolitics for Stalled IMF Loan

According to Mr. Dar, the IMF has not provided a justification for the “unnecessary delay” in the ninth review, which has been pending since November.

Pakistan’s finance minister, Ishaq Dar, claimed that international organizations wanted the impoverished country to declare default like Sri Lanka and then take part in the negotiations. He attributed the deadlock over an IMF loan package to geopolitics.

According to Mr. Dar, the IMF has not provided any justification for the “unnecessary delay” in the ninth review, which has been pending since November. He reaffirmed that the nation would fulfill its obligations regardless of the IMF bailout package. Pakistan will not go into default, he declared, according to a report in the Dawn newspaper.

However, Mr. Dar asserted that the talks with the international lender based in Washington were still ongoing and that the ninth review would be finished this month. 2019 saw the signing of an agreement by the IMF to give $6 billion to Pakistan subject to a number of requirements. Due to the IMF’s insistence that Pakistan finish all formalities, the plan was repeatedly derailed and the full reimbursement is still pending.

On June 15, Mr. Dar stated that while requests for securing guarantees for $3 billion from friendly bilateral partners had been met as promised earlier, the World Bank and the Asian Development Bank had provided guarantees for the remaining $3 billion.

The Minister claimed that China’s commercial banks agreed to provide loans to Pakistan after realizing the politics behind the needless delay. He claimed that Saudi Arabia and the United Arab Emirates had pledged $3 billion to the IMF, in addition to $400 million from the RISE project of the World Bank and $250 million from the Asian Infrastructure Investment Bank.

His comments came after the IMF criticized Pakistan’s budget for the fiscal year 2023–2024 as a “missed opportunity” and raised a number of concerns. In an effort to stave off an impending default caused by declining foreign reserves, the government last week presented a budget for 2023–2024 totaling 14.4 trillion yen in the National Assembly.

Mr. Dar claimed that while the IMF’s concerns about the current budget might be justified, the exemptions granted to the IT, agricultural, and small- and medium-sized enterprise (SME) sectors were crucial to ensuring the nation’s economic growth, which is currently estimated to be 0.29%.

He questioned, How can we achieve growth without aiding some sectors of the economy?

He predicted that the IT sector would generate a return of $2.5 billion this year and $4.5 billion the following.

Additionally, Mr. Dar said that exemptions were made while keeping in mind the potential expansion of the IT sector. Since many years ago, Pakistan’s economy has been in free fall, bringing unrestrained pressure in the form of unchecked inflation and making it nearly impossible for a large number of people to make ends meet.