Bilawal says IMF not being fair, Pakistan facing ‘perfect storm’ of crises

Foreign Minister Bilawal Bhutto Zardari has stated that the International Monetary Fund (IMF) is not being fair to Pakistan, adding that the country is in a “a perfect storm” of crises.

Cash-strapped Pakistan is in a race against time to implement measures to reach an agreement with the Fund. The agreement with the IMF on the completion of the ninth review of a $7 billion loan programme — which has been delayed since late last year — would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.

The prerequisites by the lender are aimed at ensuring Pakistan shrinks its fiscal deficit ahead of its annual budget around June.

Pakistan has already taken most of the other prior actions, which included hikes in fuel and energy tariffs, the withdrawal of subsidies in export and power sectors, and generating more revenues through new taxation in a supplementary budget.

As a last step, the international lender has required Pakistan to guarantee that its balance of payments deficit is fully financed for the remaining period of an IMF programme.

In a wide-ranging interview with the Associated Press on Friday, Bilawal said that Pakistan was facing an economic crisis, the consequences of last year’s catastrophic flooding and terrorism which was “once again rearing its ugly head”.

According to the report, the minister sharply criticised the IMF.

Bilawal said the PPP supported expanding revenue collection and believed those who were well off should pay more, but added that Pakistan had been unable to achieve structural tax reform “for the last 23 IMF programmes that we have been a part of.”

“Is it really the time to nitpick about our tax policy and tax collection while we’re suffering from a climate catastrophe of this scale?” Bilawal asked.

The IMF is not being fair to Pakistan, which is also dealing with 100,000 new refugees following the West’s withdrawal from Afghanistan and “a steady uptick of terrorist activities within our country,” the publication quoted him as saying.

He further said that the IMF was stretching out talks at a time when the country needed money to help the “poorest of the poor”.

“And they’re being told that until their tax reform is not complete, we will not conclude the IMF programme.”

He said that Pakistan was able to navigate the Covid-19 pandemic, the Taliban’s takeover of Afghanistan, as well as inflation and supply chain disruptions.

But then last year’s floods devastated the country, he said, calling it the “biggest, most devastating climate catastrophe that we’ve ever experienced.”

Pak-China ties

He further said that Pakistan had a “very healthy economic relationship” with China that was “also in the spotlight as a result of geopolitical events”.

He said the government was “very grateful” to Beijing for the $1.3bn loan announced earlier this month, especially in light of the floods.

“The government of China have supported Pakistan whether by rolling over our debt or by providing economic assistance in one form or the other,” the foreign minister said. “I am not concerned about this issue at the moment. We need help and support from wherever we can get it.”

He said that in order to meet the country’s energy needs and to provide relief to citizens paying for expensive imported fuel the government was “looking to work with anyone, including Russia”.

He added that he believed there was now space for imports from Russia within the US price cap.

Afghanistan

Talking about Pak-US ties, Bilawal said, “We are on a healthy trajectory.”

He pointed to talks on climate, health, technology and trade. He added that Pakistani officials had also met recently to discuss counterterrorism.

According to the publication, Bilawal said that Pakistan’s “alleged influence over the Taliban has always been exaggerated”.

He said Pakistan, however, had always maintained the importance of engaging with the Taliban on terrorism and other issues, especially women’s rights to education and jobs.

He said Pakistan would like to see the Taliban take action against all terrorist groups, but said there were questions about their capacity to combat these groups.

Bilawal said his advice to the West is to engage with the Taliban “regardless of what’s going on on the ground”. He said that without a functioning economy, there won’t be “space” for the Taliban to implement political decisions.