‘No urgency’ for Pakistan to enter IMF program: Finance minister

Pakistani Finance Minister Asad Umar speaks exclusively to Arab News in an interview in Islamabad on Thursday, Dec. 13, 2018. (AN photo)
Updated 14 December 2018
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‘No urgency’ for Pakistan to enter IMF program: Finance minister

  • Reviewing CPEC contracts “not at all” off the table
  • $1 billion received of $6 billion Saudi bailout package

ISLAMABAD: Pakistan is in no rush to strike a deal with the International Monetary Fund to deal with its balance-of-payments crisis, Finance Minister Asad Umar has told Arab News. He added that funding from “friendly countries” would help shore up the economy over the remainder of the current financial year.

Pakistani officials have been in talks with the IMF since October, and have formally requested Islamabad’s 13th bailout since the late 1980s to help settle the economy while the new government of Prime Minister Imran Khan, who came to power in July, struggles to implement reforms. 

“I have no urgency right now to get into an IMF program,” Umar told Arab News in a wide-ranging interview on Thursday. “We are in discussions (with the IMF). When we reach the (outlines) of a program which we believe is in the best interests of Pakistan’s economy, we’ll go ahead and sign that.” 

Umar said that pressure to rush a deal with the IMF through had eased, thanks to a combination of bilateral financial support from historical allies and a host of economic measures taken by the government in its first hundred days in power, which he claimed would result in a current account deficit of $6-7 billion less than the previous financial year.

“So I’ve saved $6-7 billion of my financing need and then I’ve arranged funding from bilateral sources to bridge the gap,” Umar said, referring to a $6 billion package agreed on with Saudi Arabia this October and expected aid from China and the UAE. 

Umar refused to provide a figure for packages promised by the latter two countries, but said that, in both cases, it was just a case of “dotting the i’s and crossing the t’s” on the agreements.

Injections from allies will provide a much-needed boost to Pakistan’s foreign exchange reserves, which dipped to their lowest in over 4 years — at $7.3 billion — in the week that ended on Dec. 7. 

Any IMF program will likely require Pakistan to commit to strict structural reforms to the economy, and to curbing the government spending that has seen growth soar to nearly 6 percent — at the fastest rate in 13 years — but has also exhausted budgets.

In October, the IMF predicted Pakistan’s growth will slow to four percent in 2019 and about 3 percent in the medium term. This month, the Pakistani rupee dropped to an all-time low of 0.0144 against the dollar. 

Umar denied that the government had allowed the rupee’s value to drop in order to fulfill a precondition of an IMF bailout. He said the main sticking point in negotiations with the organization was the pace of reforms.

“We believe that if you try and make reforms too quickly, if you try and make an adjustment too quickly, you’ll crash the economy,” the minister said. “And that is not in our interests, not even from a debt-sustainability point of view.”

The IMF has also said it wants “absolute transparency” regarding Pakistan’s debts — a demand that will require clarification of certain opaque deals, as well as its debts to China for some $60 billion in financing for energy and infrastructure projects that are part of Beijing’s Belt and Road Initiative. 

Asked whether reviewing agreements related to the China-Pakistan Economic Corridor (CPEC) program was off the table, the finance minister said: “Not at all.”

“If it’s (a question of) transparency, then transparency is available,” he said, stressing that contracts with China had been signed in accordance with “well-established rules.”

Umar also noted that Pakistan had satisfied all concerns raised by the IMF and US officials with regard to CPEC. 

“The IMF had a lot of questions. The Americans had a lot of questions around CPEC,” he said. “We made a presentation, we shared the data with them — first meeting. They never came back after that.”

Umar said new projects slated to be added to the CPEC portfolio included a railway line from the port city of Karachi to the northwestern town of Peshawar, and the establishment of special industrial zones.

“There are a few other projects in the area of the industrial cooperation framework that is being finalized, and which will lay the basis on which future industrial cooperation will take place, private sector-to-private sector,” Umar said. “So, from government-to-government, which is what the first phase of CPEC was, it will be moving to business-to-business.”

Giving details of the Saudi package of $3 billion in foreign currency support for a year and a further loan of up to $3 billion in deferred payments for oil imports, the finance minister said $1 billion of the $6 billion package had been disbursed so far. 

“It’s not a rescue package, it’s a financing package,” he said. “Saudi Arabia will earn a rate of return on that investment.” 

Umar explained that the pending agreements with China and the UAE were also not aid packages: “These are all financial transactions. There are loans, there are trade finance facilities. Pakistan is not taking aid from anyone.”

Referring to a recent World Bank report that said trade between India and Pakistan was far below its potential of $37 billion, the minister said Pakistan was ready to engage in a constructive trade dialogue with its neighbor but “it can’t be a one-sided relationship.”

Trade has long been tied to political conflict between the hostile neighbors who have fought three wars since independence from Britain in 1947. Peaceniks on both sides say progress in trade ties could help bolster a fragile peace process.

But Umar ruled out any discussions on trade with India before general elections there in 2019 and said Pakistan would not take “any kind of unilateral step” when it came to granting India Most Favoured Nation (MFN) trade status, a proposal that past governments have toyed with. 

On the government’s promise of attracting investment from Pakistanis living abroad, the finance minister said rules for a diaspora bond were approved by the Cabinet a week ago and the bond would be issued late December or January. 

“There are equity-related or investment opportunity-related diaspora investments which are being finalized. The board of investment has worked on them; there was a presentation to the prime minister today (Thursday) about some of those,” Umar said. “First the diaspora bonds will be launched and then these initiatives will follow quickly after.”

The minister said despite “doom-and-gloom” scenarios painted by critics, he owed his optimism about Pakistan’s future to the fact that he was a “data-driven person.”

“I’m sure you would have heard (people say), ‘Business is not investing (in Pakistan) anymore,’” Umar said. “But if you look at private sector credit offtake — a useful metric to measure business investment — it was five times more in the first quarter of this year than in the first quarter of last year.

“So where is this business which is not (investing)?” he continued. “I’ve got a whole host of businesses which are coming in, international businesses coming in, all saying we want to invest hundreds of billions in Pakistan.”


Indonesia’s Supreme Court reverses acquittal of former official in slavery case

Updated 9 sec ago
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Indonesia’s Supreme Court reverses acquittal of former official in slavery case

JAKARTA: Indonesia’s Supreme Court jailed a former government official accused of human trafficking for four years, reversing a lower court decision to acquit him after people were found in cages in his palm oil plantation.
Condemned internationally and at home, the senior official in the provincial government in North Sumatra, Terbit Rencana Perangin-angin, had been accused of human trafficking, torture, forced labor, and slavery.
Prosecutors launched an appeal after a lower court acquitted him of the charges in July.
Indonesia’s Supreme Court said he would serve four years in jail, without specifying reasons, in a ruling dated Nov. 15 and seen on the court’s website on Tuesday.
The Supreme Court and prosecutors did not immediately respond to requests for comment. Reuters has sought comment from Terbit’s lawyer.
The macabre case came to light in 2022, when a police corruption investigation into Terbit found people detained in cages on his property, drawing condemnation from rights groups.
A police investigation found 665 people had been held in cells on his property since 2010, court documents showed.
Terbit, who was jailed for nine years for corruption in 2022, had previously claimed the detained individuals were participating in a drug rehabilitation program.
Prosecutors said they had been tortured and forced to work on his plantation. Six had died in captivity, Indonesia’s rights body found.

Four Pakistan security forces killed as ex-PM Khan supporters flood capital

Updated 24 min 7 sec ago
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Four Pakistan security forces killed as ex-PM Khan supporters flood capital

ISLAMABAD: Pakistani protesters demanding the release of ex-prime minister Imran Khan on Tuesday killed four members of the nation’s security forces, the government said, as the crowds defied police and closed in on the capital’s center.
More than ten thousand protesters armed with sticks and slingshots took on police in central Islamabad on Tuesday afternoon, AFP journalists saw, less than three kilometers (two miles) from the government enclave they aim to occupy.
Khan was barred from standing in February elections that were marred by allegations of rigging, sidelined by dozens of legal cases that he claims were confected to prevent his comeback.
But his Pakistan Tehreek-e-Insaf (PTI) party has defied a government crackdown with regular rallies. Tuesday’s is the largest in the capital since Khan was jailed in August 2023.
Interior Minister Mohsin Naqvi said “miscreants” involved in the march had killed four members of the paramilitary Rangers force on a city highway leading toward the government sector.
Prime Minister Shehbaz Sharif said the men had been “run over by a vehicle.”
“These disruptive elements do not seek revolution but bloodshed,” he said in a statement. “This is not a peaceful protest, it is extremism.”
The government said Monday that one police officer had also been killed and nine more were critically wounded by demonstrators who set out toward Islamabad on Sunday.


The capital has been locked down since late Saturday, with mobile Internet sporadically cut and more than 20,000 police flooding the streets, many armed with riot shields and batons.
The government has accused protesters of attempting to derail a state visit by Belarusian President Alexander Lukashenko, who arrived for a three-day visit on Monday.
Last week, the Islamabad city administration announced a two-month ban on public gatherings.
But PTI convoys traveled from their power base in northwestern Khyber Pakhtunkhwa province and the most populous province of Punjab, hauling aside roadblocks of stacked shipping containers.
“We are deeply frustrated with the government, they do not know how to function,” 56-year-old protester Kalat Khan told AFP on Monday. “The treatment we are receiving is unjust and cruel.”
The government cited “security concerns” for the mobile Internet outages, while Islamabad’s schools and universities were also ordered shut on Monday and Tuesday.
“Those who will come here will be arrested,” Interior Minister Naqvi told reporters late Monday at D-Chowk, the public square outside Islamabad’s government buildings that PTI aims to occupy.
PTI’s chief demand is the release of Khan, the 72-year-old charismatic former cricket star who served as premier from 2018 to 2022 and is the lodestar of their party.
They are also protesting alleged tampering in the February polls and a recent government-backed constitutional amendment giving it more power over the courts, where Khan is tangled in dozens of cases.


Sharif’s government has come under increasing criticism for deploying heavy-handed measures to quash PTI’s protests.
“It speaks of a siege mentality on the part of the government and establishment — a state in which they see themselves in constant danger and fearful all the time of being overwhelmed by opponents,” read one opinion piece in the English-language Dawn newspaper published Monday.
“This urges them to take strong-arm measures, not occasionally but incessantly.”
The Human Rights Commission of Pakistan said “blocking access to the capital, with motorway and highway closures across Punjab and Khyber Pakhtunkhwa, has effectively penalized ordinary citizens.”
The US State Department appealed for protesters to refrain from violence, while also urging authorities to “respect human rights and fundamental freedoms and to ensure respect for Pakistan’s laws and constitution as they work to maintain law and order.”
Khan was ousted by a no-confidence vote after falling out with the kingmaking military establishment, which analysts say engineers the rise and fall of Pakistan’s politicians.
But as opposition leader, he led an unprecedented campaign of defiance, with PTI street protests boiling over into unrest that the government cited as the reason for its crackdown.
PTI won more seats than any other party in this year’s election but a coalition of parties considered more pliable to military influence shut them out of power.


Russia’s Medvedev warns West over discussing nuclear weapons for Ukraine

Updated 26 November 2024
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Russia’s Medvedev warns West over discussing nuclear weapons for Ukraine

MOSCOW: Senior Russian security official Dmitry Medvedev said on Tuesday that if the West supplied nuclear weapons to Ukraine then Moscow could consider such a transfer to be tantamount to an attack on Russia, providing grounds for a nuclear response.
The New York Times reported last week that some unidentified Western officials had suggested that US President Joe Biden could give Ukraine nuclear weapons, though there were fears such a step would have serious implications.
“American politicians and journalists are seriously discussing the consequences of the transfer of nuclear weapons to Kyiv,” Medvedev, who served as Russia’s president from 2008 to 2012, said on Telegram.
Medvedev said that even the threat of such a transfer of nuclear weapons could be considered as preparation for a nuclear war against Russia.
“The actual transfer of such weapons can be equated to the fait accompli of an attack on our country,” under Russia’s newly updated nuclear doctrine, he said.


China sends naval, air forces to shadow US plane over Taiwan Strait

Updated 26 November 2024
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China sends naval, air forces to shadow US plane over Taiwan Strait

  • The US Navy’s 7th fleet said a P-8A Poseidon maritime patrol aircraft had flown through the strait

BEIJING: China’s military said on Tuesday it deployed naval and air forces to monitor and warn a US Navy patrol aircraft that flew through the sensitive Taiwan Strait, denouncing the United States for trying to “mislead” the international community.
Around once a month, US military ships or aircraft pass through or above the waterway that separates democratically governed Taiwan from China — missions that always anger Beijing.
China claims sovereignty over Taiwan and says it has jurisdiction over the strait. Taiwan and the United States dispute that, saying the strait is an international waterway.
The US Navy’s 7th fleet said a P-8A Poseidon maritime patrol aircraft had flown through the strait “in international airspace,” adding that the flight demonstrated the United States’ commitment to a free and open Indo-Pacific.
“By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations,” it said in a statement.
China’s military criticized the flight as “public hype,” adding that it monitored the US aircraft throughout its transit and “effectively” responded to the situation.
“The relevant remarks by the US distort legal principles, confuse public opinion and mislead international perceptions,” the military’s Eastern Theatre Command said in a statement.
“We urge the US side to stop distorting and hyping up and jointly safeguard regional peace and stability.”
In April, China’s military said it sent fighter jets to monitor and warn a US Navy Poseidon in the Taiwan Strait, a mission that took place just hours after a call between the Chinese and US defense chiefs. (Reporting by Beijing Newsroom; Additional reporting and writing by Ben Blanchard in Taipei; Editing by Edwina Gibbs)


Ukraine says Russia launched ‘record’ 188 drones overnight

Updated 26 November 2024
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Ukraine says Russia launched ‘record’ 188 drones overnight

KYIV: Russia staged a record number of drone attacks overnight over Ukraine, damaging buildings and “critical infrastructure” in several regions, the air force said Tuesday.
“During the night attack, the enemy launched a record number of Shahed strike unmanned aerial vehicles and unidentified drones,” the air force said, referring to Iranian-designed drones and putting the figure at 188.