PAKISTAN READER

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Government to seek “longer and larger” IMF bailout package to sustain macroeconomic stability

In Brief
ECONOMY
Government to seek “longer and larger” IMF bailout package to sustain macroeconomic stability
On 12 March, the government said it was seeking to negotiate a “longer and larger” economic bailout package with the IMF, to maintain the nascent macroeconomic stability. Finance Minister Aurangzeb Khan further hinted at the possibility of reducing the central bank’s policy rate, along with a rapid implementation of a digitalized tax system and the privatization of Pakistan International Airlines (PIA). The IMF team is expected to arrive this week for its second review of the USD three billion Standby Arrangement (SBA). Khan stated: “We would be very keen to start discussions on another EFF (Extended Fund Facility) with them” during these talks.” During these talks, the government intends to “at least kick-start the process and get this going,” with Khan expressing hope that discussions would be held on the blueprint of the next SBA in April. He further stated that the government would transition soon towards revenue realization for wholesale business and agriculture, with the federal government beginning effective taxation in the wholesale agricultural business to address the mismatch between tax contribution and GDP share. Khan remained confident that the current SBA would be completed because of Pakistan’s compliance with the stipulations; however, he highlighted the importance of supporting recent macroeconomic stability with a longer and larger programme. On this, he stated: “Unless structural benchmarks are completed, continuing with patchwork was no more the way to live with for a sovereign of 245 million with nuclear capabilities.” He emphasized the need to move into the execution phase of all areas of economic reforms, and referring to the FBR reforms for increased transparency, Khan contended that “leakages in various forms and shapes” needed to be eliminated. Additionally, he added that the government would begin privatizing state-owned enterprises “in a very big way,” beginning with the PIA, and would allow the private sector to step in. (Khaleeq Kiani, “Pakistan eyes ‘larger, longer’ bailout package,” Dawn, 13 March 2024)

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IMF says it looks forward to working with new government, calls for resolving electoral issues
On 8 March, the International Monetary Fund (IMF) said it would support forming a new economic programme for Pakistan upon any request from the new government while urging Pakistan to peacefully resolve electoral disputes. An IMF spokesperson stated: “We look forward to engaging with the new government to complete the second review under the current Stand-by Arrangement and, should the government request, support the formulation of a new medium-term economic programme.” Though the spokesperson did not comment on domestic politics, the call to political leaders asking them to resolve electoral disputes was seen as an unusual step taken by the IMF. The spokesperson clarified that while the current focus was on “the completion of the current Stand-by program, which ends in April 2024,” the IMF was looking “forward to working with the new government on policies to ensure macroeconomic stability.” Pakistan’s authorities had earlier stated that they intend to seek a USD six billion loan from the IMF to help debt repayments in 2024. (“Anwar Iqbal, “In rare political message, IMF urges resolution of all electoral disputes,” Dawn, 9 March 2024)

IMF “stands ready” to send a mission for reviewing SBA
On 7 March, the IMF’s Director of Strategic Communications, Julie Kozack, stated that the IMF was “ready to hold a mission for the second review of the Stand-by shortly after a new cabinet is formed” in Pakistan. She highlighted the focus on completing the current Stand-by Arrangement (SBA), which ends in April 2024, after the IMF would work with “the new government on policies to ensure macroeconomic stability.” Kozack pointed out that on 11 January, the first review of the SBA was approved by the IMF’s Executive Board, bringing total disbursements under the Stand-by to USD 1.9 million. She detailed that the SBA support programme underpinned “the authority’s efforts to stabilize the economy with a strong emphasis on protecting the most vulnerable segments of the population.” Further, Kozack lauded the caretaker government for maintaining “economic stability through strict adherence to the fiscal targets while protecting the social safety net,” and for continuing to build foreign exchange reserves while simultaneously implementing “timely adjustments in tariffs to shore up the viability of the energy sector.” (“Transcript of IMF Press Briefing,” International Monetary Fund, 7 March 2024)

Shehbaz Sharif wants a swift bailout package with the IMF
On 4 March, after taking administering oath to the office of the Prime Minister, Shehbaz Sharif in his maiden meeting gave a green signal to begin negotiating a new long-term bailout package with the IMF. Focusing on the country’s economic situation, he recommended strengthening the Special Investment Facilitation Council (SIFC), shutting down enterprises that were making losses, and preparing a roadmap on war footing. The absence of former Finance Minister Ishaq Dar and the presence of the President of Habib Bank Limited, Muhammad Aurengzeb, indicated that Sharif intends to form an economic committee that is not solely based on experience. Sharif was briefed by the Finance Secretary, Imdadullah Bosal, on the fiscal situation, implementation of the IMF’s conditions, and probable demands of the IMF for the new programme the country is seeking. He was also briefed on the shortfall in the FBR tax revenues and the possibility of revenue measures.

Caretaker finance minister advises incoming government to prioritize new IMF deal to sustain economic accomplishments
On 1 March, Dawn reported that the caretaker Finance Minister, Dr Shamshad Akhtar, advised the incoming government to stay the course and quickly reach a new agreement with the IMF. With inflation currently at 29 per cent, Akhtar claimed multiple successes under her tenure that could be sustained with a “new medium-term facility” that would provide an “anchor to carry out the difficult reforms.” She took the examples of critical reforms to FBR restricting, privatization of loss-making SOEs, and the implementation of the SOE policy for improved governance, in order to maintain a vision that would “help revive the economy and build on the hard-earned gains.” Akhtar claimed that the unsustainable debt position and Pakistan’s breach of Fiscal Responsibility & Debt Limitation Act (FRDL) since 2013 were the primary challenges. She cited an increase in GDP to 2.1 per cent in the first quarter of FY24 following two consecutive quarters of negative growth, further noting a five per cent growth in agriculture and 2.5 per cent growth in the manufacturing activity. The minister also highlighted how “difficult and unpopular measures including a reduction in the subsidy bill on power and gas through timely implementation of quarterly tariffs helped improve primary account.” There was also an improvement in the fiscal position, which helped tackle public debt and reduce net domestic borrowing by 67 per cent. (Khaleeq Kiani, “Go for quick IMF bailout, advises outgoing finance minister,” Dawn, 1 March 2024)

Pakistan aims to augment IMF loan to USD eight billion
On 26 February, The News International reported that as per “top official sources,” Pakistani authorities were debating augmenting the upcoming IMF bailout package from USD 7.5 billion to USD 8 billion. This would help in exploring climate finance to augment the Extended Fund Facility (EEF), similar to Bangladesh. Earlier in June 2023, when the possibility of augmentation was brought up with the IMF, the organization declined saying that the Stand by Arrangement (SBA) was short-term in nature, and that this possibility could be explored the next time. Under the IMF’s Resilience and Sustainability Facility (RSF), countries undertaking reforms are given affordable long-term financing in order to minimize threats to the balance of payments stability. The RSF supports “policy reforms that reduce macro-critical risks associated with climate change and pandemic preparedness,” and augments “policy space and financial buffers to mitigate the risks arising from such longer-term structural challenges.” Countries requesting access to the RSF need to meet certain criteria, including sustainable debt, capacity to repay, and high-quality reforms addressing long-term structural challenges of climate change. Recently, Pakistan approved the Public Investment Management Assessment (PIMA) framework including Climate- PIMA. The country thus looks to the IMF for support for its economic growth and goal to make infrastructure climate resilient. (Mehtab Haider, “Pakistan looking to hike IMF loan to up to $8bn,” The News International, 26 February 2024)

 
PM Sharif directs authorities to take measures to enhance IT exports
On 12 March, Prime Minster Shehbaz Sharif commended the increase in the export volume of Information Technology (IT) services to more than USD three billion, while seeking a comprehensive roadmap to further enhance exports. He made this statement while chairing a meeting to review the performance of the IT and telecom sectors, and added that banking issues being faced by start-ups, freelancers and IT companies would be swiftly addressed to bring “Pakistan’s IT sector on a par with the international standards.” The Prime Minister’s Office (PMO) later assured that the government would take necessary measures to utilize the potential of IT exports, and would provide the youth required facilities for education and skills development. During the meeting, it was highlighted that under the previous government’s term, IT exports rose by 12 per cent during the first seven months of FY24 compared to the corresponding period in FY23. The Digiskills programme was responsible for training four million students and USD 400 million was invested in Pakistani start-ups, allowing the country to rank second globally based on the number of freelancers in 2023. Sharif thus directed relevant officials to take all required legal and policy-related steps to increase investment and exports, while calling for expediting work on projects that would enhance the professional and technical youth. (Syed Irfan Raza, “PM Shehbaz seeks detailed roadmap to boost IT exports,” Dawn, 13 March 2024)
 
USD 3.2 billion received from multilateral and bilateral creditors in first seven months of FY24
On 13 March, the Ministry of Economic Affairs released data which indicated that in the first seven months of FY24, Pakistan received USD 2.408 billion from multilateral creditors and USD 794.6 million from bilateral creditors. The multilateral support included, the International Development Association, which gave USD 1.058, the China National Aero-Technology Import and Export Corporation, which gave USD 508.34 million, and the Asian Development Bank, which gave USD 620 million, among others. The bilateral support included USD 42.18 million from China; USD 30.64 million from France, USD 10.89 million from Germany, and 18.62 million from Japan, among others. (Irshad Ansari, “$3.2b received in financial assistance in July-Jan period,” The Express Tribune, 13 March 2024)

POLITICS
PPP and JUI-F to express reciprocal support for Senate elections
On 12 March, the PPP and the JUI-F claimed to have forged an alliance for the upcoming Senate elections, with PPP leader Nayir Bukhari stating that his party would support the JUI-F candidate for the Senate polls in Balochistan, while JUI-F would support PPP’s Yousaf Raza Gillani in Islamabad. The by-election is scheduled for 14 March. Bukhari explained that three of Balochistan’s Senate seats had been vacated, after which JUI-F appealed to the PPP for support. JUI-F leader Maulana Abdul Ghafoor Haideri termed the meeting between both parties as a “good improvement on the political front,” while Gilani highlighted that a “good working relationship was established in the parliament” and both parties would “vote for each other.” Six seats in the general category became vacant after senators who were elected as National Assembly or provincial assembly members stepped down. (“PPP, JUI-F join hands for Senate polls,” The Express Tribune, 12 March 2024; “PPP, JUI-F reach agreement over Senate by-poll on March 14,” Dawn, 12 March 2024)
  
EXTERNAL
Pakistan urges increased transparency in the working of the UNSC
On 11 March, while addressing an open debate at the UN headquarters, Pakistan’s envoy Usman Jadoon called for enhanced transparency and accountability in the working of the UN Security Council (UNSC). He underscored: “The detrimental impact of selective implementation and non-implementation of Security Council resolutions on its credibility cannot be underestimated.” Jadoon called for considering how to ensure the implementation of resolutions, claiming that the leaders are “at a crossroads where the UN Security Council must respond decisively to the increasingly complex challenges threatening global peace and security.” He cited Rule 48 of the Provisional Rules of Procedure, which requires the UNSC to “fully adhere to openness and transparency,” and along these lines stated that it is “crucial that the council meets in public unless decided otherwise.” He also noted how the “absence of interactive discussions in open meetings compromises the council’s mandated role,” and advocated for an overhaul of the “penholder” system to “ensure greater inclusivity and fairness in decision-making.” Jadoon asserted the need to enhance the “quality and frequency of reporting to the UN General Assembly,” which he described as the “principal deliberative, policy-making, and norm-setting organ of the UN.” However, he warned that failure to enforce resolutions would both “undermine the credibility” of the UNSC while eroding “confidence in its ability” to fulfil its responsibilities. (Anwar Iqbal, “Pakistan wants greater transparency in UNSC,” Dawn, 13 March 2024)
 
Turkish president commends Pakistani president over phone call
On 12 March, Turkish President Recep Tayyip Erdogan held a phone call with President Asif Ali Zardari, to congratulate him on securing the office of the head of the state. As per the President’s Secretariat, the leaders spoke on matters of bilateral importance and the need to enhance cooperation in areas of mutual interest. The statement from the secretariat added that Erdogan expressed hope to “see the role of Turkish women in the Islamic world.” (“Turkish President Erdogan felicitates Zardari on becoming head of state,” The News International, 12 March 2024)
 
SECURITY
Two-week ban imposed on Adiala Jail following potential attacks by ‘anti-state’ groups
On 12 March, the Punjab Home Department imposed a blanket ban on meetings with prisoners in Adiala Jail for two weeks, following the arrest of alleged terrorists in the jail’s vicinity a few days ago. Along with this, the prison department was directed to increase security measures in the jail, wherein more than 6,000 inmates, including Imran Khan, Shah Mehmood Qureshi, and Parvez Elahi, are detained. As a result of this ban, even lawyers were not allowed to meet their clients. The Punjab Home Department directed authorities to carry out a search operation inside the jail while asking the bomb disposal squad to conduct screening in and around the jail. Law enforcement agencies and intelligence agencies issued orders to the inspector general of prisons of Punjab and jail authorities, claiming that ‘anti-state’ groups may target the prison and create chaos; however, the PTI has contended that this move is contrary to court orders. On the same day, PTI Chairman Barrister Gohar Ali Khan denounced the ban and stated: “We demand that before imposing this blanket ban, Imran Khan’s family members and lawyers should have been informed.” (Ikram Junaidi & Mohammad Asghar, “Adiala jail becomes no-go area after ‘terror alert’,” Dawn, 13 March 2024)
 
SOCIETY
HRCP highlights need to balance national security interests with the needs of the Chaman people
On 12 March, the Human Rights Commission of Pakistan (HRCP) expressed concerns over the sit-in protests staged by trade and business communities in the town of Chaman for the last five months and suggested engaging with communities, stakeholders, and Afghan representatives through dialogue to resolve the issue. The commission issued a fact-finding report and highlighted the need for efforts to increase economic opportunities in Balochistan, particularly in Chaman, through investment in local industries and job creation for small traders to mitigate the impact of border restrictions. It advised the government to prioritize humanitarian considerations and the well-being of families with cross-border ties while formulating policies, and to balance national security interests with the needs of the local population. With regard to long-term solutions, the HRCP recommended addressing the root cause of economic hardship and border tensions through sustained efforts, including promoting sustainable development and cross-border cooperation. (Saleem Shahid, “HRCP advises balancing security interests with needs of Chaman residents,” Dawn, 13 March 2024)
 
PROVINCES
Sindh: Cabinet members sworn in, including sole female member
On 11 March, nine members of a 13-member new provincial cabinet took the oath of office at Governor House, administered by Sindh Governor Kamran Tessori. Most of the members had served in the previous cabinet, and only one woman was included in the provincial cabinet this time. The chief minister appointed three advisers and allocated portfolios of ministers and advisers amid expectations that he would further expand his cabinet soon. Sharjeel Memon was given the transport and mass transit department and excise, taxation and narcotics control department, Dr Azra Pechuho the health department and population welfare department, Nasir Shah the energy department, Sardar Shah the school education and literacy department and college education department, Saeed Ghani the local government department and public health engineering and rural development department, Jam Khan Shoro the irrigation department and food department, among others. (Tahir Siddiqui, “Only one woman included in Sindh’s 13-member cabinet,” Dawn, 13 March 2024)

The attempted terrorist attack on Adiala Jail, which many in Pakistan think was staged, and today’s order to deny Imran Khan access to his family & lawyers has created suspicion. Imran Khan is the entire country’s red line & his life & safety is being considered at high risk now. -Hammad Azhar   The weakness of democracy in Pakistan is due to interference of the establishment and fascist puppets imposed as govt. -Shahid Khan Yousafzai   Pakistan people are not happy about the recent riggings in the election. So they are protesting all over the country now. -Mohammad Hayat

“When we invest in women and girls, everyone gains.” -An opinion in Dawn, ‘Women in Punjab’