Pakistan seeks EU support for $7.3b loan request

ISLAMABAD:  Pakistan has asked European nations to cast their votes in its favour in a meeting of the International Monetary Fund’s Executive Board, which will meet in the first week of September to consider Islamabad’s request for a $7.3 billion bailout package.

Finance Minister Ishaq Dar sought the support during a meeting with envoys of the European Union’s member states. He spoke about the current state of economy, the factors that brought it down and the corrective measures that the government wanted to take to put the economy back on track.

The heads of mission of Austria, Belgium, Bulgaria, Czech Republic, Denmark, France, Germany, Greece, Hungary, Italy, Poland, Portugal, Romania, Spain, Sweden and the United Kingdom were present.

The finance minister pressed them to use their influence over the IMF board of directors and lend support to Pakistan, according to an announcement made by the Ministry of Finance on Tuesday.

EU countries, both within and outside the monetary union, have about 30% votes on the IMF Executive Board. The US has 16.8% votes, followed by Japan 6.3%, Germany 5.8%, France and United Kingdom each having 4.3%.

Historically, the US always played an important role in the IMF board for winning bailout packages for Pakistan. This will be the 19th programme that the country will get, but it has yet to introduce structural changes, necessary to avoid recurrence of economic crisis.

A staff-level agreement has been reached between Pakistan and the IMF for a $5.3 billion package with the promise of another $2 billion. The final decision on both rests on the Executive Board on September 4.

Dar told the envoys that Pakistan was committed to all its international obligations and was taking the fresh loan to return the amount borrowed by the previous government. The measures agreed with the IMF were in line with Pakistan’s national interests, he said.

He stressed that Pakistan’s successful negotiations with the IMF has had a positive impact on national and international markets.

He said resource mobilisation lay at the heart of reforms agreed with the IMF and the government would try to achieve this year’s revenue target of Rs2.475 trillion, requiring a 25% growth over last year.

In the budget, the government has imposed Rs207 billion worth of new taxes and another Rs300 billion would be netted by improving governance, expanding the tax net, removing the Statutory Regulatory Orders and plugging leakages. The FBR has been given access to bank accounts for targeting the tax dodgers.

Dar said the long delay in tariff rationalisation by the previous government had forced the new government “to take one of the most painful decisions of tariff rationalization.”

EU Head in Pakistan Lars-Gunnar Wigemark assured Dar that the bloc would extend all technical assistance and support to Pakistan in its efforts to revive the economy and ensure good governance, rule of law and welfare of people.

“The EU will positively review Pakistan’s request, but it will not be blanket support as Pakistan has to meet conditions agreed with the IMF,” said Wigemark while talking to The Express Tribune.

In reply to a question that the PML-N government was giving lesser priority to human rights, the finance minister said clubbing the Human Rights Division should not be misconstrued as a lack of determination on the part of the government to uphold human rights.

Responding to fears expressed by some of the ambassadors about re-emergence of circular debt, Dar said the government would take all necessary steps to prevent the debt from emerging again.