Former Pak FM says things to 'remain tight for a while' on economic front

Former Pakistan Finance Minister Miftah Ismail has said that things on the economic front will "remain tight" as the economy faces a severe liquidity crunch, Geo News reported. Pakistan is seeking an installment of USD 1.1 billion from the International Monetary Fund to avoid default.

In a tweet, Ismail stated, "Things will be tight for a while but we can get enough loans for now that we will get some room. But for future we have to figure out a way to export more." He wrote the tweet in response to a question-and-answer session held on the microblogging site.

Miftah Ismail made the response to the question asked by Geo TV, "If we secure the IMF's tranche, will $1.1 billion be enough to manage economic challenges? In addition, even if we add some more amount from bilateral donors, who are awaiting [the] IMF nod, our reserves will still continue to dwindle because of external payments, then what's the solution?"

Pakistan is spiralling deeper into crisis amid a shortage of dollars and accelerating inflation, Geo News reported. Pakistan Foreign Ministry to convince the IMF that the country is willing to take tough measures, including increasing taxes and gas prices.

Meanwhile, Pakistan Prime Minister Shehbaz Sharif on Sunday said that the "country is facing substantial financial challenges" as the IMF is "combing every book" and analysing "everything" and "every subsidy" during the ongoing negotiations over the ninth review of the USD 6.5 billion loan programme.

The International Monetary Fund (IMF) and the Pakistan government are at a stalemate over the fiscal gap. IMF has worked out a larger gap of approximately Pakistani Rupees (PKR) 900 billion, equivalent to 1 per cent of the gross domestic product (GDP), Geo News reported.

Pakistan is contesting the fiscal gap in achieving the primary deficit and urged the IMF for incorporating flow of reduction under the revised Circular Debt Management Plan (CDMP) and reduced the amount of required additional subsidy of PKR 605 billion against the earlier target of PKR 687 billion, according to Geo News report.

The sources told Geo News that the differences between the Pakistan government and IMF still persist over "ascertaining the exact fiscal gap," as per the Geo News report.

The source further said, "Once it's finalised with the IMF, then the additional taxation measures will be firmed up, which will be unveiled through the upcoming mini-budget." The source added that the technical-level talks between two sides will continue on Monday.