KARACHI: After a statement from US Secretary of State Michael Richard Pompeo (Mike Pompeo) which has put the International Monetary Fund (IMF) in an embarrassing position, the global lender has moved to dispel the impression that it would deny a loan to Pakistan under the influence of the US.
The resident representative of IMF, Teresa Daban Sanchez, met representatives/analysts of brokerage houses in Karachi in the weekend and discussed the current situation.
“A large part of the discussion was centered around the role of the US in Pakistan’s access to the IMF fund, the likely timing of program, and disclosures of funding from China on the CPEC project,” said Fawad Khan, analyst at BMA Capital, who attended the meeting.
About the influence of the US and Pakistan’s request for the new program, “the meeting highlighted the limited voting power of the US (16.7 percent) for approving Pakistan’s potential request for the new program by IMF’s executive board. The decision-making process may potentially cause delay in the approval of Pakistan’s request,” Khan added.
The IMF cannot deny a loan to Pakistan because of its membership of the lender but the country may be required to divulge greater details on loans obtained in order to allay the US’ concerns.
A recent statement from US Secretary of State Mike Pompeo had stirred controversy about a potential IMF loan to Pakistan which was dismissed by Pakistan as “totally wrong.”
Pakistan has categorically denied that the loans are intended to pay off Chinese debts.
Mike Pompeo had warned that any potential IMF bailout for Pakistan’s new government should not provide funds to pay off Chinese lenders.
“Make no mistake, we will be watching what the IMF does. There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” said Pompeo in an TV interview.
Reacting to Pompeo’s statement, Pakistan’s former finance minister, Dr. Salman Shah, has termed the statement embarrassing for the IMF because it gives the impression that fund is being run as per the wishes of US.
Pakistan is in the process of forming a new government after the July 25 general elections. The new government will be in a position to decide, most likely by September, about availing the IMF bailout package to stabilize the wobbling economy.
Pakistan plans to seek up to $12 billion from the IMF as the country is facing a financing shortage of $25 billion to $28 billion. However, the IMF representative did not comment on the size and type of bailout program.
“The IMF has expectedly refrained from commenting on the need for the IMF program and options available to the government, along with the size and type of the program,” said Khan.
Sanchez also appreciated Pakistan’s central bank’s performance and recent policy measures in the form of the devaluation of the Pak rupee and hike in policy rate, according to Fawad Khan.
IMF dispels impression it would deny loan to Pakistan on US influence
IMF dispels impression it would deny loan to Pakistan on US influence
- US has limited voting power for approving Pakistan’s potential request for new program by IMF’s executive board
- Pakistan may be required to divulge greater details on loans obtained in order to allay US concerns
Pakistan terms climate change, demographic pressures as ‘pressing existential risks’
- Pakistan has suffered frequent climate change-induced disasters, including floods this year that killed over 1,000
- Pakistan finmin highlights stabilization measures at Doha Forum, discusses economic cooperation with Qatar
ISLAMABAD: Pakistan’s Finance Minister Muhammad Aurangzeb on Saturday described climate change and demographic pressures as “pressing existential risks” facing the country, calling for urgent climate financing.
The finance minister was speaking as a member of a high-level panel at the 23rd edition of the Doha Forum, which is being held from Dec. 6–7 in the Qatari capital. Aurangzeb was invited as a speaker on the discussion titled: ‘Global Trade Tensions: Economic Impact and Policy Responses in MENA.’
“He reaffirmed that while Pakistan remained vigilant in the face of geopolitical uncertainty, the more pressing existential risks were climate change and demographic pressures,” the Finance Division said.
Pakistan has suffered repeated climate disasters in recent years, most notably the 2022 super-floods that submerged one-third of the country, displaced millions and caused an estimated $30 billion in losses.
This year’s floods killed over 1,000 people and caused at least $2.9 billion in damages to agriculture and infrastructure. Scientists say Pakistan remains among the world’s most climate-vulnerable nations despite contributing less than 1 percent of global greenhouse-gas emissions.
Aurangzeb has previously said climate change and Pakistan’s fast-rising population are the only two factors that can hinder the South Asian country’s efforts to become a $3 trillion economy in the future.
The finance minister noted that this year’s floods in Pakistan had shaved at least 0.5 percent off GDP growth, calling for urgent climate financing and investment in resilient infrastructure.
When asked about Pakistan’s fiscal resilience and capability to absorb external shocks, Aurangzeb said Islamabad had rebuilt fiscal buffers. He pointed out that both the primary fiscal balance and current account had returned to surplus, supported significantly by strong remittance inflows of $18–20 billion annually from the Middle East and North Africa (MENA) and Gulf Cooperation Council (GCC) regions.
Separately, Aurangzeb met his Qatari counterpart Ali Bin Ahmed Al Kuwari to discuss bilateral cooperation.
“Both sides reaffirmed their commitment to strengthening economic ties, particularly by maximizing opportunities created through the newly concluded GCC–Pakistan Free Trade Agreement, expanding trade flows, and deepening energy cooperation, including long-term LNG collaboration,” the finance ministry said.
The two also discussed collaboration on digital infrastructure, skills development and regulatory reform. They agreed to establish structured mechanisms to continue joint work in trade diversification, technology, climate resilience, and investment facilitation, the finance ministry said.
