ISLAMABAD: Contrary to Finance Minister Ishaq Dar’s claim that there was not need to seek a bailout package from the International Monetary Fund (IMF), senior officials of the ministry Sunday said they had been asked to prepare a representation for the fund.
According to officials, who requested anonymity, they were informed during the recent annual meetings of the World Bank and the International Monetary Fund in Washington that the government of Pakistan should move quickly in seeking the IMF support before it was too late.
“In preparing a request to the IMF, the government was faced with a dilemma,” officials said adding that “mentioning of political crisis emanated from corruption charges against top government as the reasons to current pressures on the current account could become a bad omen itself.”
On the sidelines of the World Bank and IMF September annual meetings, we have been hearing taunts and talks against the IMF funding ‘a corrupt government'” they recalled.
The issue finally converges at Finance Minister Dar who himself is facing graft charges in an accountability court and at every hearing investors and officials fear his arrest. “How could an indicted person go to the IMF or any other multilateral institution?” they asked. “And the fate of the finance minister’s portfolio hinges on outcome of power struggle within the ruling Pakistan Muslim League-Nawaz (PML-N), which has reached its climax by now,” officials observed. “Until it (power struggle within PML-N) ends or clears out, it will keep taking its toll on the economy,” they maintained.
They said that most of the relevant office-bearers of the government had started underlining the need for a change of guards at the Finance Ministry, immediately, to halt the downturn in foreign exchange reserves, portfolio investment and impression of the economy in the eyes of foreign investors. “Going for more private borrowing in avoiding multilateral support and to fill up the current account gap yawning beyond $12 billion was nothing less than a financial suicide,” officials added.
They said that Pakistan’s economy at current level needed sentimental support more than the fundamental assistance. “It was a negative impression created out of the Panama case and subsequent disqualification of former prime minister Nawaz Sharif that was haunting the economy more than anything else,” they pointed out.
“Other than the sentimental blows, the country’s economy was also facing burden of CPEC’s input cost in terms of massive imports of heavy machinery and infrastructure-related equipment as well as technology. Lack of parallel growth in exports, again due to political upheaval, had resulted in widening of trade deficit that in turn deepened the current account gap.”
Published in Daily Times, October 30th 2017.