IMF conditions relaxed with help from friendly nations: PM’s adviser M Haris

• Sanaullah says IMF conditions were much stricter.
• PM’s adviser says he hopes same won’t happen now.
• Govt has proposed budget in line with IMF demands.

Adviser to Prime Minister on Political Affairs Rana Sanaullah said Monday that the International Monetary Fund (IMF) relaxed conditions after friendly nations helped Pakistan with their pledges.

“This time, the credit […] for getting the conditions relaxed goes to our friendly countries as stated by Prime Minister Shehbaz Sharif,” Sanaullah said during a press conference in Faisalabad.

Gulf nations Saudi Arabia and the United Arab Emirates (UAE) have signed multi-billion dollar memorandums of understanding with Pakistan recently, with PM Shehbaz stressing that the country would not seek loans, but rather investments to boost the economy.

“The nations that helped include China, Saudi Arabia, and UAE. Their promises and I would like to call it ‘hand holding’ would ensure that [the previous] scenario does not repeat,” Sanaullah said.

The PDM-led coalition government, which came into power in April 2022 and served till August 2023, had to take a slew of measures, including raising petrol prices to historic highs, and increasing power and gas tariffs, to secure a bailout, which skyrocketed inflation.

Sanaullah noted that during the 16 months when the PDM was in power, the IMF’s conditions were stricter, but he hoped that it would not be the case this time around.

With Shehbaz again at the helm and Pakistan desperately needing another IMF bailout, the government is now taking steps to secure a longer programme from the lender.

Experts have said that the government’s plan to raise taxes in its 2024-25 budget and boost state revenues will help it win approval from the IMF for a loan to stave off another economic meltdown, but could fuel public anger.

The PML-N-led government has set a challenging tax revenue target of Rs13 trillion for the year starting July 1, a near-40% jump from the current year, and a sharp drop in its fiscal deficit to 5.9% of GDP from 7.4% for the current year.

The federal government had to reduce the fiscal deficit as part of negotiations with the IMF, with which it is discussing a loan of $6-8 billion, as it seeks to avert a debt default for an economy growing at the slowest pace in the region.

“The budget is enough to get an IMF programme, as long as … the budget is passed in the way it is presented,” Miftah Ismail, who as then-finance minister successfully negotiated the revival of the last Extended Fund Facility (EFF) programme in 2022, told Reuters.