IMF conditions eased with help from friendly nations: Adviser to PM

• Sanaullah says the IMF’s terms were much stricter.
• The prime minister’s adviser says he hopes the same won’t happen now.
• The government has proposed a budget in line with IMF requirements.

Adviser to the Prime Minister on Political Affairs Rana Sanaullah said on Monday that the International Monetary Fund (IMF) has eased conditions after friendly states helped Pakistan with their commitments.

“This time, the credit […] for the easing of conditions goes to our friendly countries, as stated by Prime Minister Shehbaz Sharif,” Sanaullah said during a press conference in Faisalabad.

The Gulf states, Saudi Arabia and the United Arab Emirates (UAE) recently signed multibillion-dollar memoranda of understanding with Pakistan, with Prime Minister Shehbaz stressing that the country will not seek loans, but rather investment to boost the economy.

“Nations that have helped include China, Saudi Arabia and the United Arab Emirates. Their pledges and I would like to call it ‘handholding’ will ensure that [the previous] the scenario is not repeating itself,” Sanaullah said.

The PDM-led coalition government, which came to power in April 2022 and will serve until August 2023, has had to take a series of measures, including raising the price of petrol to historic highs and raising electricity tariffs. energy and natural gas, to secure a bailout, which skyrocketed inflation.

Sanaullah noted that during the 16 months that the PDM was in power, IMF conditions were tightened, but he hoped that would not happen this time.

With Shehbaz back at the helm and Pakistan in desperate need of another IMF bailout, the government is now taking steps to secure a bigger program from the lender.

Experts said the government’s plan to raise taxes in its 2024-25 budget and boost government revenue would help it win IMF approval for a loan to stave off another financial meltdown, but could to incite public outrage.

The PML-N-led government has set a challenging tax revenue target of Rs13 trillion for the year starting July 1, a jump of nearly 40% from the current year and a sharp drop in its fiscal deficit to 5.9% of GDP from 7.4% for the current year.

The federal government has had to reduce the budget deficit as part of negotiations with the IMF, with which it is discussing a $6-8 billion loan, as it seeks to avert a default for the region’s slowest-growing economy.

“The budget is enough to get an IMF program, it is enough… the budget is approved in the way it is presented,” Miftah Ismail, who until then as finance minister successfully negotiated the revival of the last Expanded Fund (EFF ) program in 2022, he said Reuters.