Pak FM hints at 'Plan B' as IMF loan remains locked

PAKISTAN: Apparently writing off the International Monetary Fund (IMF) programme, Pakistan Finance Minister Ishaq Dar has hinted at the government's so-called 'Plan B', working immediately next month on rescheduling the bilateral external debt of over USD 27 billion, Pakistan-based Dawn reported.

While addressing the post-budget news conference, Dar ruled out any talks about restructuring external debt with multilateral agencies or Paris Club as it is "not a dignified thing to do." He said that Pakistan will not bother multi-laterals, adding that "rescheduling Paris Club [loan] is not on our menu," as per the Dawn report.

Ishaq Dar expected little from the International Monetary Fund (IMF) beyond disbursements under the delayed ninth IMF review which would have released USD 1.1 billion installments.

He said, "There is no chance for the 10th review" meaning that the current IMF programme of USD 6.5 billion will conclude at around USD 5.1 billion without the remaining 10th and 11th reviews for USD 1.4 billion funds."

In response to a question regarding debt rescheduling with bilateral partners like China, Dar did not name any country. However, he said that this was something the government intended to begin working on early in the next fiscal year after the budget is passed, as per the Dawn report.

As per the news report, Pakistan's overall bilateral debt amounts to around USD 37 billion. However, there is little space in around USD 10bn Paris Club debt due to its recent rescheduling under G-20 Debt Service Suspension Initiative (DSSI).

According to Pakistan Finance Minister Ishaq Dar, rescheduling bilateral debt was under consideration with or without the IMF. He said that the decision to discuss another fund bailout package will now be left to the next government after the general elections, Dawn reported.

Dar rejected the possibility of sovereign default by any stretch of the imagination. He said that Pakistan will ensure repayments to all multilateral creditors.

He agreed that domestic debt accounted for almost 85 per cent of total public debt. However, he ruled out its rescheduling. market. Ishaq Dar even criticised the Pakistan Tehreek-e-Insaf (PTI) government for making legal changes in the central law under the IMF programme which he stressed "crippled the government," the report said.

He said that during his previous tenure, the Pakistan government used to borrow from the central bank and repay at the end of each quarter. However, he noted that the banks had increased their spread by up to 2 per cent over the central bank's policy rate, according to Dawn's report.

He said that they had re-profiled domestic loans in the past when interest rates were around 6.5 per cent and added that they will consider such a move when the environment is "conducive." Dar said that government will soon introduce a new system in which treasury bills could be directly sold to the people rather than restricting them to commercial banks.

Rejecting reports that the government had offered amnesty in the budget to people to convert their foreign exchange holdings at home into official channels, he said that someone might have seen some paper of proposals that did not come up for consideration or become part of the budget approved by the cabinet.

Regarding high subsidies, Ishaq Dar that the government had provided Pakistani Rupees (PKR) 900 billion in subsidies for the power sector alone, which he stressed needed to be improved. He emphasised that the power sector had been a key source of challenge while dealing with the IMF.