Pakistan has abandoned its planned economic diplomacy with US as the Trump administration has softened its viewpoint for Pakistan’ expected bailout package from International Monetary Fund (IMF), a top official at Finance Ministry told Media.
Earlier, the US wanted IMF to impose strict terms and conditions on Pakistan for $6-7 billion bailout package, but with recent letter of US President to Prime Minister Imran Khan seeking Pakistan role in bringing Taliban at dialogue table has changed the scene as Premier Imran Khan had responded positively and announced to play his role in Afghan peace.
Earlier, Pakistan’s financial managers had a plan to initiate economic diplomacy with the US to help soften terms and conditions IMF authorities had placed before financial managers’ team of PTI government. At the beginning, the Fund had asked PTI government to bring down budget deficit to just over 2.5 percent of the GDP in next three years knowing the fact at present the fiscal deficit hovers at 6.6 percent of the GDP.
This condition was tough and now IMF authorities have stated to be showing flexibility in the said demand, but the official said that exact figure about the fiscal deficit is yet to be finalised. To a question the official said that Pakistan and IMF have substantially made progress positively and the bailout package would be inked sometime in the month of January. He said Pakistan and IMF will be well prepared for the meeting of Board of Governors — the highest decision making body of the Fund.
The PTI government has already increased electricity tariff by Rs1.27 per unit which is yet to be notified by Nepra and implemented the gas tariff increase by up to 143 percent. Moreover the government has also increased the discount rate to 10 percent and appreciated the US dollar by about Rs16 in toto. The government has taken these steps as prerequisites to qualify for IMF bailout package, but the Fund functionaries want more actions which are being negotiated at present.
The Fund is also concerned over the massive shortfall in revenue that amounts to Rs100 billion registered in first quarter and to this effect, the official said that the government is left with no option but to increase the revenue through administrates tax measures and apart from it, the government will have to take steps in the long term strategy to improve the revenue outlook of the country.
Unlike past practices, the official mentioned, the incumbent FBR chairman has refused to collect the advance tax to show better revenue saying no wrong doing will be exercised to increase the revenue. The official said that a plausible long term strategy to increase the revenues of the country is being finalised and if it is implemented smoothly, the country’s revenue will certainly jack up substantially.
About further devaluation of Pak Rupee, the official said, that IMF wants to ensure the real independence of the State Bank of Pakistan. He said in 1997, the central bank was given the autonomous status, but the way it was handled, many questions raised. In last 5 years, Finance Ministry’s interference was visibly seen, but this government tries to avoid meddling in affairs of the central bank.
Over the real autonomy of the central bank, when his attention was drawn towards the Premier's statement under which he said while talking to a group of anchorpersons soon after the US dollar massive appreciation that there will be mechanism from now onward under which a body at highest level will be informed prior to devaluation of Pak rupee and asked if such initiative would compromise the independence of the State Bank of Pakistan, the official said that the body under PM directives has been made but it will just coordinate on important issues and will not dictate the central bank. So it will not invite the criticism from IMF.
To a question on circular debt in power sector that swells to over Rs1.3 trillion, the official said IMF has grave concerns over it and wants the Nepra to directly notify its tariff determination. The Fund has also concerns over not including PIA, Railways, and Pakistan Steel Mills in privatisation list
The United States said Saturday it welcomes actions Pakistan is taking to promote a negotiated solution to the war in neighbouring Afghanistan.
The acknowledgement came a day after Pakistani Prime Minister Imran Khan announced his country has arranged another round of Washington’s peace talks with the Afghan Taliban scheduled for Monday (today).
“The United States welcomes any actions by the Pakistani government to promote greater cooperation, including fostering negotiations between the Taliban, the Afghan government, and other Afghans,” a US embassy spokesperson in Kabul told VOA.
US special representative for Afghanistan reconciliation, Zalmay Khalilzad, has met, and will continue to meet, with all interested parties, including the Taliban, to support a negotiated settlement to the conflict in Afghanistan, the spokesperson added.
Neither Imran Khan nor the US spokesperson has disclosed the possible venue for the upcoming meeting with Taliban officials. Some Afghan sources say Monday’s meeting will take place in Islamabad, but no official confirmation is available.
Khalilzad, who is visiting regional countries to gather support for Afghan peace talks, is to lead the US delegation in talks with insurgent representatives.
This will not be the first time Khalilzad has met with the Taliban. Since taking office in September, the special US envoy has held two publicly known rounds of preliminary discussions with insurgent negotiators in Qatar, where the Taliban runs its so-called political office. The talks have been for the sake of talks, according to insurgent and other sources aware of the meetings.
US President Donald Trump earlier this month wrote a formal letter to Khan asking for his help to bring the Taliban to the table for negotiations.
A day later, Khalilzad visited Islamabad where he met with Khan and his military chief, General Qamar Javed Bajwa, to follow up on Trump’s request, Pakistani officials say.
Speaking in Peshawar on Friday, Khan said the US has changed its tune by requesting help instead of saying Islamabad is not doing enough, as US officials have previously insisted.
“By the grace of Allah, the dialogue is now happening Insh’Allah [God willing] on the 17th [Khan did not mention the month] and Pakistan has facilitated the talks between America and the Taliban,” Khan said. He did not share further details.
Khan recounted Friday that critics used to mock him as “Taliban Khan” for saying the Afghan war could not be ended without political negotiations but now all key stakeholders are jointly working to pursue a political settlement to end the violence in Afghanistan.
“If peace were achieved, God willing, Peshawar will change and become a hub of commerce and tourism, as things around the 2,500 years old living city are likely to change,” Khan said.
Ambassador Khalilzad is 13 days into an 18-day visit to the region. He has travelled to Pakistan, Afghanistan, Russia, Turkmenistan, Uzbekistan and Belgium and plans to visit the UAE and Qatar.
Pakistani officials privy to the US interaction with the Taliban have told VOA that until now no progress has been achieved because the insurgents adamantly demand “a date or timeframe” for all foreign troops to withdraw from Afghanistan before the Taliban decide to participate in an intra-Afghan peace process.
US officials have long maintained Taliban leaders are sheltering in Pakistan with covert support from the country’s intelligence agency. Washington has been urging Islamabad to use its influence to bring the insurgents to the negotiating table.
Pakistani officials say their influence over the Taliban has significantly declined over the years because the insurgents have gained control over large areas of Afghanistan and continue to pose serious battlefield challenges for US-backed Afghan security forces.
