What are the Real Reasons For The Delay in the Approval of IMF Program | Dr Khaqan Najeeb Analysis
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What are the Real Reasons For The Delay in the Approval of IMF Program | Dr Khaqan Najeeb Analysis
What are the Real Reasons For The Delay in the Approval of IMF Program | Dr Khaqan Najeeb Analysis
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00:00It is a matter of getting a loan of 7 billion dollars. Why has it become such a mess?
00:09Bismillahir Rahmanir Rahim. Ashfaq bhai, one thing is very clear that running Pakistan without the support of IMF is not prudent policy making.
00:17And it will be very painful compared to if we stay with IMF and any such thing that creates uncertainty is removed.
00:26If you look at it currently, it is a macro stability. What does it mean?
00:30We have slowed down the economy.
00:32As a result of this macro stability, inflation is downward trending.
00:36The loss of the current account has been managed.
00:38Pakistan's reserves have consequently gone to an import cover of two months.
00:44Remember, they had dropped below the import cover of one month.
00:48So, there is a stability.
00:50Doctor, so what we have done, is it done in an artificial way or is it organic?
00:54It is the consequence of the engagement with the fund.
00:59Any country, when it is in turmoil, the reserves were below 4 billion dollars.
01:04Loss was happening consistently.
01:06So, IMF has given a tight monetary policy, slowing of the economy, by imposing new taxes on Pakistan.
01:14To manage that, it is necessary to go to an extended fund facility.
01:19And for that, a staff level agreement was made on 12th July.
01:22But I say again and again, going to the IMF, Mr. Ashfaq, is the certainty.
01:28But what program is decided, that is not a certain thing.
01:32It is largely open to authorities, what kind of program they decide.
01:37Because this is not an IMF program, Mr. Ashfaq.
01:40This is a program of Pakistan, supported by an extended fund facility of the IMF.
01:48Now, when I will present it in this way, you will say that we should have carried out the taxes in a different way.
01:55We should have kept the expenditure reform at the centre stage.
02:00So, what I am trying to say is that in this negotiation, when you…
02:04Doctor, I would like to…
02:06Yes.
02:07I would like to…
02:08Obviously, we want that the understanding on this issue is in a very simple way for the common man.
02:14So, for a common man, please try to explain to us, what are our problems,
02:19because of which a staff level agreement was made on 12th July.
02:22After that, it was said that there will be no such difficulty.
02:25So, what are the things that we have to do, after which we will get this facility?
02:31Sir, look, whenever this is decided, an external financing is decided.
02:37How much external financing do we need in this financial year?
02:40It was decided that it was close to 26 billion dollars.
02:43Okay.
02:44Its commitments are…
02:45Okay.
02:46And maybe Pakistan can understand that it can be fulfilled even less than 26 billion dollars.
02:50But the fund thinks that it needs 26 billion dollars.
02:53In that, 12 billion dollars…
02:54Okay.
02:55Mr. Ashfaq, 4 billion dollars of China, 5 billion dollars of Saudi Arabia, 3 billion dollars of UAE.
03:00It is not difficult for us to give.
03:02We have 9 billion dollars of savings.
03:04We cannot give 12 billion dollars.
03:06So, we have to say to these countries that for one year, please postpone their payment.
03:11The fund is saying that you should convince the executive director, who is on their board,
03:17to come and say that Saudi Arabia will postpone 5 billion dollars.
03:21I think that they should have made this confirmation on the 12th of July.
03:26Anyway, there is a delay of 2 months.
03:29Now, I don't want to sound alarmist, but what is the complication in that?
03:34The complication is that when you say to China to postpone 4 billion dollars,
03:38and also to postpone the debt of IPPs,
03:41and also to give back their 500 billion dollars,
03:44if all these things come under negotiation, then many dots have to be added.
03:50I think that is where it is taking more time than required.
03:54This is one thing.
03:55Similarly, you said to Saudi Arabia that now the fund is saying to give us 2 billion dollars more.
04:00For that, you said to give us an oil facility.
04:03If not an oil facility, then direct funding.
04:06You started a conversation.
04:09Then you opened a new door with them.
04:12Then you needed commercial funding of 800 million dollars.
04:15For that, you went to UAE banks.
04:18So, now you are getting the picture that the picture is not that simple.
04:23There are many dots to connect.
04:25I am sure that the authorities are trying their best.
04:28But I have always said this.
04:31Dr. Sir, we used to say that the Nooli government,
04:37the Mian Sahibaan,
04:39they have very good terms and ties with the Saudi government.
04:42For example, they used to give oil.
04:44And whenever there was a difficult time, we used to go there.
04:47So, we used to get some support from there.
04:50But now, the relations of these countries are not personal.
04:54Obviously, they are based on interests.
04:56Because of this, the relations of neighboring countries have improved.
05:01Including trade with China.
05:04You can see the relations with Saudi Arabia.
05:07So, have these things had an impact?
05:12Our incapability to handle our economy.
05:19Or the delay in payments.
05:22Because of this, they are skeptical.
05:26So, certainly.
05:27If you talk about Saudi Arabia.
05:29Some time ago, in the World Economic Forum,
05:32their finance minister said that we are taxing our people.
05:36You should do it too.
05:37And there is a consensus.
05:39And China included.
05:41That Pakistan should stay with the IMF program.
05:44These are the statements of Chinese officials.
05:46That's why I am quoting.
05:47That's why I am absolutely sure.
05:49And I think I have been the only person consistently saying
05:52that negotiate out the IMF.
05:54Put your best foot forward.
05:56This means that put your best team forward.
05:58The IMF is going to take the 24th program in Pakistan.
06:03The extended fund facility in the 23rd program.
06:07One has been completed in life.
06:09So, it is wrong to say that we have gone to the IMF 24 times.
06:12That is not correct, Ashfaq.
06:13Because if one of the longer-term facilities has been completed.
06:17And Ashfaq, I know this because it was a 13-16 facility.
06:21And I had anchored that facility in the core team for Pakistan.
06:25And I again keep telling the countries that we made a professional setup.
06:29There was a lot of leverage.
06:31We had professional support in the energy sector.
06:33Okay, tell me one thing.
06:34Doctor, one thing is that it is obvious that he has the right to do the IMF on this matter.
06:41But Pakistan will have to take steps on its own.
06:44Our seriousness.
06:45You have given a lot of suggestions about energy.
06:48And I think that when the country is stuck in the swamp of debt.
06:52Children are stuck in debt.
06:53We have to pay the debt.
06:55And if we are facing financial problems.
06:57Then our expenditures should also be in that regard.
07:00What is our realization?
07:02And this thing is also seen in other countries.
07:04Because earlier you used to control something.
07:06Now any news is published in English newspapers, Urdu newspapers, websites.
07:11I will give an example.
07:12Last year, the Punjab government made a decision.
07:15Which was the setup of Punjab's Nigra.
07:17They said that we have to spend two and a half billion rupees.
07:19This is our assistant commissioner.
07:21This is our deputy commissioner.
07:23These cars will come for him.
07:25Okay.
07:26They had done that for double cabin cars.
07:30That matter went to the High Court.
07:32That stopped.
07:33Now with the permission of the Sindh government.
07:35The same decision.
07:36That is, a fund of about two billion rupees was issued.
07:39For 138 double cabin cars.
07:41That yes, our assistant commissioner.
07:43Sahiban will travel in a big car.
07:46He will not travel in a double cabin car.
07:48He cannot fulfill his office duties.
07:51So is there any realization in us?
07:54Should we justify this?
07:55This also went to the court.
07:57So is there anyone?
07:58How is our economy?
07:59And what are we doing?
08:01So Mr. Ashfaq, you have made a very important point.
08:04I always said that the budget should not be approached from the taxation side.
08:08The budget should be approached from the expenditure side.
08:11Current expenditure.
08:12If I take out the debt, which is the debt payment.
08:15In which there are salaries, pensions, running of the civil government.
08:18All this comes.
08:19If you look at it, there is an increase of 24%.
08:22You are right.
08:23This 24% increase should not have been done.
08:26I think it should have been curtailed here.
08:28Our developmental budget.
08:30It was spent 7.75 last year.
08:33This year it was kept at 1400 rupees.
08:35Initially.
08:36Even then I said that this is not a tenable position.
08:38Because all this is borrowed money.
08:40Once you pay for the debt.
08:42The 9700-8000.
08:44This is absolutely correct.
08:46If you want to finish, you have to give me 30 seconds.
08:49Because you did a very good opening.
08:51Yes, yes, please.
08:53Sir, you have 30 seconds.
08:55In the opening, you said that why does Pakistan go?
08:58If Pakistan does not want to go back to the IMF.
09:01So here is the formula.
09:02Create functioning markets.
09:04Do global trade integration.
09:07Do divestment.
09:09Do data mining.
09:11Deregulate Pakistan.
09:13Devolve.
09:14The subjects that have to go down.
09:16Create a communication strategy.
09:18And bring your team to do all this.