The International Monetary Fund (IMF) on Sunday said that a call between Managing Director Kristalina Georgieva and Prime Minister Shehbaz Sharif took place on the request of the PM – a statement that indicates Islamabad has not refrained from doing politics despite nearing default.
“The call took place in response to a request by the Prime Minister of Pakistan to discuss the International Conference on resilient Pakistan,” Esther Perez, the resident representative of the IMF confirmed to news channel.
On Friday, an official handout released by the PM’s Office after his speech at the Hazara Electric Supply Company (HAZECO)’s inauguration ceremony had read that “the IMF managing director called premier Shehbaz on the phone.”
During his speech, the PM had also claimed that the IMF managing director had contacted him.
It seems that the government is not yet ready to mend its ways as it makes questionable claims of strength despite risking sovereign default with only $4.5 billion forex reserves in hand.
The remaining reserves are enough to finance only three weeks of imports. Pakistan’s three months (January-March) debt repayments stand at $8.5 billion. This includes $2 billion to the UAE which the government is trying to get a rollover for.
Such factually incorrect statements may create more problems for Pakistan to convince the IMF, particularly when there is a long history of mistrust between both sides.
The country has long been in difficult relationships with the IMF due to its habit of making promises at the time of getting a loan tranche but then abandoning these commitments once the tranche has been disbursed. This has created a wide gulf.
A spokesperson of the IMF in a statement to the media also said that “the Managing Director had a constructive call with Prime Minister Sharif in the context of the International Conference on Resilient Pakistan to be held in Geneva on Monday, January 9.”
It added that the MD again expressed her sympathy to those directly affected by the floods and supported Pakistan’s efforts to build a more resilient recovery.
The PM had also claimed on Friday that the IMF mission would come to Pakistan in two to three days.
“I asked her to send an IMF team for the completion of the pending 9th review of the programme so that the next loan tranche is released. She assured that the mission will visit [Pakistan] in the next two to three days,” Shehbaz had said.
However, in its statement to the media, the IMF spokesperson said that the IMF “delegation is expected to meet with Finance Minister Ishaq Dar on the sidelines of the Geneva conference to discuss outstanding issues and the path forward”.
The statement did not indicate that the 9th review mission will arrive in Pakistan in three days – a self-claimed deadline that will expire on Monday.
It was reported on Saturday that for the first time, Pakistan’s official foreign currency reserves had slipped to a dangerous level of $4.5 billion because of major debt repayments.
After the PM’s speech, the finance ministry sources also said no dates for the IMF review mission had been finalised yet.
The prime minister had also said that Georgieva inquired whether or not China and Saudi Arabia were supporting Pakistan.
Following this, a statement by Pakistan’s Interior Minister Rana Sanullah also confirmed that even foreign nations will not help without the IMF umbrella.
“If we back out from these [MF] conditionalities, then our economic survival will become next to impossible and even our friendly countries cannot extend financial help to us,” Sanaullah had said in Faisalabad.
The interior minister had maintained that if the present government tries to fulfill the IMF’s harsh conditions, they would jack up inflation and prices would spiral coupled with an economic setback.
The 9th review talks between Islamabad and the Fund have been pending since October last year, resulting in the withholding of a $1.1 billion loan tranche.
Pakistan is keen to complete the 9th review so that the World Bank and Asian Infrastructure Investment Bank (AIIB) may also release their loans.
The talks have been delayed because of differences over exchange rate policies, restrictions on imports, demand for imposition of additional taxes, and increasing the electricity prices to settle roughly Rs500 billion in circular debts.