Pakistan : According to Reuters, Pakistan’s Finance Minister Muhammad Aurangzeb, the country intends to submit a formal request for funding from the International Monetary Fund (IMF) facility that aids in the management of external shocks.
“We have officially mentioned to be considered for this office,” Aurangzeb said in a meeting uninvolved of the IMF/World Bank harvest time gatherings in Washington.
The IMF granted Pakistan a bailout last month, but its Resilience and Sustainability Trust (RST) provides additional funding.
Additionally, the nation is in negotiations with the Asian Infrastructure Investment Bank regarding a credit enhancement for the Panda bond, which is planned to be issued initially for $200-250 million.
Aurangzeb stated that Pakistan also hopes to complete both the delayed privatization of Pakistan International Airlines (PIA) and the outsourcing of Islamabad’s international airport in November. The government wants to privatize PIA by November. At the World Bank’s Washington headquarters, he spoke with AFP.
Aurangzeb had previously stated in an April interview with AFP that he hoped the privatization of the state-owned PIA would be finished by June 2024.
The finance minister stated in a Wednesday speech that the five-month delay was caused by two factors: ensuring macroeconomic stability and carrying out the appropriate research on behalf of the parties interested.
He said, referring to macroeconomic factors, “The reality is, when any foreign investor comes in, or even the local investor, who are going to put in a substantial amount of money, they want to ensure that the foundation is there.”
Aurangzeb mentioned that potential bidders for both PIA and Islamabad airport needed to be checked out, which contributed to the delay as well.
He stated, “Therefore it was ultimately the cabinet that approved the extension in the timelines so that people can conduct their due diligence before they make these submissions.”
Pakistan on the verge of default, according to Aurangzeb, had fallen behind on existing dividend and profit repayments when the current government took office and had taken steps to rectify that situation after advancing macroeconomic stability.
Last year, the country was on the verge of default due to the collapse of the economy, political unrest following the devastating monsoon floods of 2022, decades of mismanagement, and a global economic downturn.
Inflation reached its highest point of 38%, but it has since fallen to less than 7% as a result of the central bank maintaining extremely high interest rates and other government tightening measures, such as import bans to preserve foreign currency.
Pakistan has received its 24th such payment from the multilateral lender since 1958, when the IMF approved a $7 billion loan last month.
Aurangzeb boasted about the improvement of the country’s current account deficit and the stabilization of the rupee’s value against the US dollar, which has decreased by approximately 65 percent since 2020.
“We paid more than $2 billion to our existing international investors in May and June on the back of this macroeconomic stability and building up on our reserves,” he stated.
The IMF estimates that Pakistan’s gross public debt is currently approximately $258 billion, or 69 percent of GDP.
“Saturation point”: Pakistan’s IMF deal is contingent not only on privatizing SOEs but also on expanding the country’s tax base and reforming the power sector.
According to Aurangzeb, all three major issues share a common theme.
“Power, tax, and SOE: Isn’t there corruption, theft, and leakage, right? He stated, ” Additionally, we must deal with everything.
However, he denied media reports that the government was not serious about expanding its tax base, stating that the tax take had increased by 29 percent in the previous fiscal year, which coincided with a previous caretaker government, and was expected to increase by another 40 percent in the upcoming fiscal year.
In 2022, only 5.2 million people filed income tax returns in a nation of more than 240 million people where the majority of jobs are in the informal sector.
He stated, “The people who are not paying need to start paying for the simple reason that we have reached a saturation point of the people who are paying.”
“The manufacturing industry, the salaried class, reached a saturation point. And this cannot continue,” he continued.
He added that the government was also committed to doing a better job of taxing real estate, retail, retail distributors, and agriculture.
