Finance minister says he is confident of being elected to the Senate of Pakistan within the two months required for him to retain his cabinet portfolio
Finance Minister Shaukat Tarin on Thursday announced that Pakistan was set to receive $2.77 billion in “unconditional” funds from the International Monetary Fund (IMF) on Aug. 23 as part of the $650 billion general allocation it has released to all member states to boost global liquidity in the wake of the coronavirus pandemic.
“Pakistan’s share in the general allocation is 0.43 percent and $2.77 billion would be transferred to our account,” he told journalists in Islamabad. “This support is unconditional, has no cost, will increase our reserves and will have salutary effect on Pakistani rupee,” he added. Noting that the funds would be sent directly to the State Bank of Pakistan, he said the government would decide how to utilize the additional funds, stressing that he would not allow it to be “wasted.”
Responding to queries about the status of the IMF’s bailout program, Tarin said his approach was focused on economic growth, which is why he had refused to increase the power tariff or personal income tax. “The progressive way of doing it [increasing tax revenue] would be to bring those out of the tax net into the fold, rather than putting the burden of additional taxes on people already paying them,” he said.
The finance minister noted that there had been no economic growth in the past three years, which had resulted in excess power generation and a spiraling circular debt. “We have been able to defer Rs. 850 billion in payables to independent power producers to create fiscal space and address some cash flow problems,” he said.
He clarified that the government had sought a recess to the IMF program to allow it to show revenue growth, adding that the target for July had been surpassed by 24 percent. He said his ministry had also submitted a proposed rationalization of power tariff subsidies to NEPRA and it should be ready for implementation in around a month. “The Fund program is currently in recess, but hale and hearty,” he said.
Of the IMF’s concerns with the Kamyab Pakistan Program, he said they were being addressed. He clarified that they had questioned the capacity of partner financial institutions and whether or not the government’s guarantee would be 100 percent, and stressed that all issues would be sorted through dialogue. He also made it clear that the Kamyab Pakistan Program would not be abandoned, claiming it directly benefited the poor and lower and middle classes.
Tarin acknowledged that the geopolitical situation had turned against Pakistan in terms of IMF engagements, but said the government was endeavoring to boost performance through structural reforms, increased revenues and improved power sector.
The finance minister—who is an unelected member of the federal cabinet and must constitutionally step down after six months if he is not elected to either the National Assembly or Senate—said the prime minister had assured him that he would be elected senator so he could continue in his role. He said he had no reason to doubt that this would not materialize within the two months remaining in his tenure before he must step down.
Tarin also accepted that the current account would be in the negative, crediting this to economic growth. However, he stressed, it would remain under 2.5 percent of GDP unlike the 6-7 percent it had been in the past. He admitted that the budget revenue collection target of Rs. 610 billion through petroleum levy would not be achievable, and claimed this would be compensated through other sources not listed in the budget.