Finance chief confirms imminent move to shore up balance of
Pakistan is seeking additional funds from the IMF to shore up
its foreign currency reserves and boost its fiscal position,
the countrys finance chief has confirmed.
Shaukat Tarin, finance adviser to Pakistans prime
minister, told Emerging Markets in an interview that the
government is in talks with the Washington lender for
$4-6 billion in extra funds, expected in the
next two to three months.
Pakistan agreed in November to an IMF emergency loan package of
$7.6 billion over 23 months, to avert a balance of payments
crisis and strengthen its reserves.
Tarin, the countrys de facto finance minister, said that
while the governments major thrust is to
increase revenues, for the short term, two to three
years, we will also seek additional help from the multilateral
agencies and they are willing to do that.
He added: I would like to have some additionality from
the IMF, which is not only going to boost our reserves but is
also going to increase our fiscal space. Thats what we
are looking at.
Tarin added that the details on the new funding will be
finalized as soon as we can. This could happen
following an IMF review, which begins tomorrow in Dubai.
While Tarin estimated $4-6 billion is needed, local press
reported this week that Pakistan will seek an additional $4.5
Pakistan received $3.1 billion upfront under Novembers
standby arrangement with the IMF, and a further $847 million
was made available following a March 31 review. The IMF
declined to comment on the prospect of additional funds, which
the Funds board must first approve. Tarin said
Novembers IMF programme really brought back some
discipline which we were lacking. He added that the goal
now is to put money on the table for development, to
create more revenue, and to create some fiscal space in the
interim with the help of multilateral agencies.
Tarins comments follow aid pledges at a recent
donors conference in Tokyo for $5.3 billion, including $1
billion each by the US and Japan. Tarin said he was more
than happy with the outcome, which exceeded the $4
billion the government had sought.
Tarin emphasised the governments focus on structural
reform, in contrast to previous practice. Every time we
have received foreign aid, we have forgotten about the
But it remains unclear where, or on what, the aid could be
usefully spent. The timing of disbursement also remains
uncertain, adding urgency to Pakistans latest IMF
US Secretary of State Hillary Clinton on Wednesday urged US
lawmakers to approve $497 million in emergency aid for
Pakistan. But the Obama administration faces an uphill struggle
convincing a sceptical Congress to triple US economic
assistance to the country to $ 1.5 billion annually. A bill to
increase funding is expected to be presented in the US Senate
Pakistans economy is gradually recovering from severe
economic problems in 2007/08 many of which predate the
global economic crisis and is forecast to expand 2.5% in
the 12 months ending June 30, the slowest pace in eight years.
Tarin forecasts growth at 3.5% next year, rising to at least 4%
Tarin said that a growth rate of more than 6% is needed
to ensure not only that poverty doesnt increase,
but also to reduce poverty.