Finance Minister Ishaq Dar said on Thursday that the previous government’s “failure to meet obligations” resulted in a trust deficit that has since gotten worse and caused a delay in the International Monetary Fund (IMF) program.
The present government, he claimed, was doing all possible to restart the economy and finish the IMF program. A staff-level agreement with the IMF, which would provide a crucial lifeline for controlling a balance-of-payments problem, was believed to be “very close” to being signed by the country.
A deal would release $1.1 billion, which analysts say is crucial if Pakistan is to avoid defaulting on its foreign debt obligations. This money is part of a $6.5 billion bailout plan that the IMF authorised in 2019.
During a seminar on improving public financial management held by the Ministry of Finance in Islamabad with international lenders, Mr. Dar stated, “We seem to be very close to signing the staff-level agreement, hopefully, God willing, in the next few days.
To the best of our abilities, “I and my team are totally dedicated to completing this initiative,” he declared. We’ve been through the review, and in my perspective, it took longer than it ought to have.
According to Mr. Dar, the forthcoming budget for 2023–24 would include measures to lift the nation out of the mess the current government inherited and back on track with strong and sustained economic growth.
He claimed that the suffering economy was given to the coalition government led by the Pakistan Democratic Movement (PDM). He claimed that although the prior government had signed the IMF deal, it had really overturned the criteria it had already put in place rather than keeping its promises.
He added that they were not individual agreements but rather the pledges of a sovereign state, adding that this “generated a lot of trust deficit” with the international community. Because of the trust deficit, according to Mr. Dar, the present bailout scheme has taken longer than any of the earlier programs. He said reforms in the energy sector, which has piled up more than Rs4 trillion ($14.18 billion) in debt, were the most critical to get the economy back on track. “The power sector has to be structurally reformed and fixed and let me endorse that the issue was and has been very grave,” he said.
Even so, he emphasized that “we are now in a position to move forward with complete confidence” and stressed that the nation has the strength and endurance to overcome the obstacles but had been lacking consistent policies and had experienced economic mismanagement over the years.
According to him, only the PML-N was able to complete an IMF program for Pakistan, and even the most powerful military leaders were never able to complete more than the ninth or tenth review of the lender’s program.
According to the finance minister, Pakistan is going through extremely difficult times and everyone must contribute to help the current government escape the mess it was handed. He claimed that in order to accomplish this, the government had already announced austerity measures, under which the prime minister had imposed a 15 percent cut on current and non-employee spending at all of the ministries, divisions, and attached departments, in addition to a ban on the purchase of all new durable goods and vehicles until June 2024.
Luxury vehicles from the cabinet members had been withdrawn and the cabinet members would be bound to travel economy class and not to stay at five-star hotels anywhere at home or abroad.
However, disastrous floods that cost the economy over $30 billion in losses and damages ensued, and the federal and provincial governments were forced to set aside Rs452 billion for relief and rehabilitation efforts.
