Pakistan Reader# 503, 9 January 2023
Joel Jacob
On 8 January, Prime Minister Shehbaz Sharif and IMF’s Managing Director Kristalina Georgieva agreed to meet at Geneva conference over a telephone conversation to ‘discuss outstanding issues’ on 9 January on the sidelines of the Geneva conference which is aimed at gathering international support for Pakistan in the aftermath of devastating floods. According to the IMF representatives, the call was in response to the request made by PM Shehbaz Sharif to discuss the International Conference on Resilient Pakistan. PM Shehabaz Sharif said, “we will place a comprehensive post-disaster framework plan for recovery, rehabilitation and reconstruction with resilience before development partners and friendly countries.”
What the conference is all about?
The Geneva conference will be co-hosted by the Pakistan government and the UN. It aims to bring together government representatives leaders from the public and private sectors and civil society to support people and the floods. It aims to cooperate with international support to rehabilitate the population affected by floods and reconstruct damaged infrastructure in a climate-resilient manner. The day-long conference will have two-fold objectives, during which the ‘Resilient Recovery, Rehabilitation, and Reconstruction Framework’ (4RF) will be launched. Plans to frame a timeline and finance framework for the rebuilding efforts have been initiated to clear the ninth review that will release USD 1.1 billion in IMF funds among other international aid.
The first part of the conference will have high-level opening segments co-chaired by PM Shehbaz Sharif and Antonio Guterres with the official launch of 4RF and partner support announcements. The donors and other partners are expected to outline support and funding commitment to the 4RF.The second part of conference will explore concrete ways to build long term climate resilience and adaptation including the articulation of provincial perspectives.
What is the rift between IMF and Pakistan?
Pakistan has been in a challenging relationship with IMF due to its habit of making promises at the time of getting a loan tranche, but has been abandoning the promises once the tranche was disbursed. This had created a wide gulf between the two sides. The government is unable to mend its ways and makes claims of strengthening the default with only USD 4.5 billion foreign exchange reserves in hand. The debt repayment of three months also stands at USD 8.5 billion including the UAE’s two billion which the government tries to get rolled over.
PM Shehbaz Sharif said that the IMF mission would visit Pakistan in next two three days, but the finance ministry has not confirmed the dates for the IMF review mission and said that had not been “finalised yet.” 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 9th review talks have been pending since October as both sides have a difference over exchange rate policies, restrictions on imports, and demand for imposition of additional taxes and increasing electricity prices to settle PKR 500 billion in circular debts. Interior Minister Rana Sanaullah said, “due to the PTI government’s policies even if the present government tries to fulfil the harsh IMF conditions, it jacks up inflation and price spiral coupled with an economic setback.” Additionally, he said the backout from IMF may result in the friendly countries not extending financial help to Pakistan.
References:
Shahbaz Rana, “Crunch talks on stalled IMF programme today,” The Express Tribune, 9 January 2023
“Friendly countries won’t help if we ditch IMF: Sana,” The Express Tribune, 9 January 2023
“Stalled bailout: IMF team to meet Dar in Geneva,” Business Recorder, 9 January 2023
Amin Ahmed, Syed Irfan Raza, “Geneva moot to focus on flood damage today,” Dawn, 9 January 2023
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