Finance Minister Ishaq Dar revealed on Wednesday that almost 90 per cent of pledges made by the international community at a donors’ conference in Geneva for flood-hit Pakistan were project loans that will be rolled out over the next three years. During a press conference alongside Prime Minister Shehbaz Sharif and other members of the federal cabinet, Dar said that $8.7bn of the pledges were loans. He did not reveal what the terms of these loans were. However, the prime minister said “we expect the terms to be lenient”.
Dar highlighted that project loan financing had already crossed $8bn, which included commitments from the Islamic Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, and the World Bank. “I am not incorporating the pledge made by the Saudi Development Bank on purpose here because it is not clear whether their announcement of $1bn pertains to programme lending or project loan,” Dar said. Responding to a question on how soon he expects these pledges to turn into actual inflows, the premier said that depended on “us”. The faster we can design and create feasibilities and impress them [donors], the faster these pledges will materialise.”
During the presser, the finance minister also talked about a meeting he had with the IMF team on the sidelines of the Geneva moot, revealing that discussions over the already delayed ninth review for the release of $1.2 billion revolved around the government’s ability to meet the revenue targets previously determined for the ongoing fiscal year after the Federal Board of Revenue fell short in December. This gap in revenue collection was a result of a high court invalidating the super tax imposed by the government in June last year, according to the finance minister. He said that his team informed the IMF that Pakistan could recover the revenue shortfall in a staggered manner after the Supreme Court ruled on the super tax. “We are not changing the fiscal budget target and we will achieve it,” he asserted.
However, the IMF still wanted the government to take fiscal measures and cut back some subsidies, Dar added. “We have identified some fiscal measures but there will be no burden on the common man. They will be very targeted and categorical,” he assured. Dar asked naysayers to stop spreading panic over “default” rumours, saying such elements must consider national interest above everything.
Dar said the government was not considering access to foreign exchange reserves held with the commercial banks which, he said, were the property of the citizens. “I have already said that Pakistan’s reserves are $10 billion. The figures I quoted were based on the principle that national foreign exchange reserves always include forex held with SBP and commercial banks”, he said.
He said earlier, every cent was transferred to the central banks’ accounts, not to the commercial banks but in 1999, when he was finance minister, a system was devised under which a substantial amount was proposed to remain with the commercial banks. So, he added, wherever the figures were quoted at the international level, a breakdown of the reserves was given.
Dar said some vested elements, who ruined the country’s economy in the past, deliberately twisted the reserves situation and started a campaign as if the government was considering access to foreign exchange held with commercial banks. “It is categorically denied and clarified that there is no such move under consideration of the government. Therefore, said misconstrued, misinterpreted and malafide propaganda should be ignored. Pakistan is moving towards improvement in its forex reserves position in the near future, InshaAllah!,” he said. With respect to the pledges made in the Resilient Pakistan Conference held in Geneva, the minister said the project loan financing announced by the World Bank, Asian Development Bank, Islamic Development Bank, and the Asian Infrastructure Bank had already crossed already $8 billion, while the $1 billion announced by the Saudi Development Bank was not clear whether it was a programme lending or the project loan.
With respect to the International Monetary Fund (IMF), Ishaq Dar said he and his team had a detailed meeting with the IMF on the sidelines of the conference in Geneva earlier this week where the IMF was informed that Pakistan was on track on the power and gas sectors reforms. The 10 percent special tax, he said, was delayed due to the stays from the high court and the matter would be resolved soon.
