IMF loan to Pakistan: province led by Imran’s party balks at IMF endorsement

ISLAMABAD: Two days away from a key meeting of the IMFboard of directors, PakistanThe federal government and the Khyber Pakhtunkhwa (KP) administration have lambasted each other after the finance minister of the northwestern province wrote to the Center to withdraw from a commitment made with the global institution to revive 6 billion dollars (Pak Rs 1.32,000 crore) ready for the cash-strapped nation.
Miftah Ismail, finance minister at the Center, had lambasted the KP finance minister on Friday Taimur Khan Jhagra for “compromising” the IMF program in the country.
Miftah is the finance minister of the Muslim League of Pakistan government led by Prime Minister Shehbaz Sharifwhile PM ousted Imran KhanPakistan Tehreek-e-Insaf (PTI) is in power in Khyber Pakhtunkhwa.
In a late night presser on Friday, Miftah accused PTI leaders of putting the country’s future “on the line” at a time when it is reeling from flash floods that have killed nearly 1,000 people and affected more than 33 million others.
The IMF had suspended the release of a $1.7 billion tranche (37,400 crore Pakistani rupees) – part of the $6 billion bailout package for Pakistan – earlier this year due to concerns regarding Islamabad’s compliance with an agreement reached earlier for the line of credit.
In its recent letter to the Centre, the KP government refused to implement a key condition precedent to the IMF loan for a surplus budget, saying the provincial administration may find it difficult to run a surplus this year given the fury of the floods.
A “provincial surplus” is the amount that the provinces do not spend from the funds transferred to them by the federal government.
Jhagra, the KP finance minister, had also hinted that he would forward his letter to the IMF. “Managing a surplus would be next to impossible if the federal government did not resolve certain issues, such as budget allocations for former tribal districts that were merged into the KP in 2018, monthly transfers of net hydel profits to the province on agreed terms and the province’s actions in other areas,” the letter said.
Miftah called the letter an attempt by PTI to have the agreement with the IMF canceled. He said the letter complicated matters for the government as the IMF, he said, was to raise the issue with Islamabad at its next board meeting on August 29.
Reacting to Miftah’s statement, former finance minister and top PTI leader Asad Umar accused the Sharif-led coalition government of “trying to suppress the voice of the KP finance minister. “Taimur Jhagra claims the right of the province. The coalition government is trying to blame its failure on the KP finance minister,” Umar said.
The IMF had signed a “staff-level” agreement with Islamabad on July 13, agreeing to release the urgently needed funds. The deal, however, awaits approval by the IMF’s board of directors, which is due to meet on Monday.

Earnest L. Veasey