Is It the Right Approach to Hold Separate Talks with the IMF? Miftah Ismail Raises Key Questions
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00:00We have always heard about reforms, Mr. Miftad, but I don't think the government has any political leverage and this government does not have any space at all.
00:08Shabaz has pointed out a technical point that these separate negotiations are taking place at the moment.
00:13Earlier, these negotiations used to take place under the umbrella of the finance ministry.
00:16It was a tight ship that used to find out who the captain is, where the talks are going on, where the authority is.
00:21Do you think this strategy is more effective than negotiating directly with the finance ministry?
00:32No, no. Look, one person should negotiate.
00:37Whether it is the finance minister, Mr. Shamshad or Mr. Arundeep or Mr. Dar, whoever it is.
00:42One person, one individual should negotiate.
00:46And then the other ministers and secretaries, whether it is petroleum or power, should negotiate with confidence.
00:53Obviously, the technical people of the IMF meet the secretaries and the additional secretaries. That is fine.
00:57But at the time of policy, only one person should negotiate.
01:01And sometimes the IMF tries to negotiate separately with the World Bank and the finance ministry.
01:07But there should be an understanding between the governor and the prime minister that we will do it together.
01:12And we will exchange notes with each other all day. I don't think that is happening at the moment.
01:17And the general influence of the finance ministry on the state bank is no longer there.
01:23Often the governors are brought by the finance minister and they are friends.
01:27This is not the case this time.
01:30So that is a problem.
01:32But actually, I think, look, the problem in fiscal policy is that if your revenue has decreased,
01:38then you can explain it easily.
01:41Look, my revenue has decreased because inflation has decreased in Pakistan.
01:45Inflation has decreased.
01:47So my revenue has decreased.
01:49But after that, they ask the second question that if your inflation has decreased so much,
01:54then why are your expenses not decreasing?
01:56Our expenses are also increasing.
01:59And secondly, everything that is reported in the Pakistani newspapers, the IMF knows about it.
02:04When we are planning here that we will give 5 crore exceptions to the real estate people,
02:10the IMF knows all this and there is pressure on us.
02:15So I think, but I still think that if they do it on this too,
02:20because at this time there can be no mini-budget.
02:24I think they are consulting each other.
02:28As Khakhan Bhai said, things used to happen between 13 and 16,
02:33or when things used to happen before, then SLAs used to happen and they used to happen.
02:37But at that time, hundreds of thousands of American soldiers were also in Afghanistan.
02:41Today, American soldiers are also not in Afghanistan.
02:43So the IMF also looks left and right.
02:46This process is an economic process, but it is not more than politics.
02:52A political shadow definitely falls on it.
02:55And the IMF, along with policy making,
02:58if it wants to increase its influence politically all over the world,
03:01then it plays a very key role in it.
03:03Maybe this is what Pakistan is seeing right now.
03:06Mr. Khakhan, before going to the break, I have a question for you.
03:09Do you think that the upcoming budget,
03:12all the requirements for it, will there be a discussion about it?
03:21And are the demands and the requirements of the state of Pakistan,
03:27is there any room for discussion there?
03:32Because there will be a very strict policy of the IMF.
03:42Mr. Khakhan.
03:44Look, if you look at Pakistan's current program,
03:48then there is a very special thing in it,
03:50that it has roped in the provinces for the first time in this program.
03:55If you look at the background,
03:59it was definitely there in the background, but it was not roped in like this.
04:02Secondly, the difference in this program is that the governance angle has been added.
04:06That was not there before.
04:08It has been specifically added in this program.
04:10So the need for coordinating the program is most, most important.
04:14Now, the upcoming budget, as I requested you,
04:17because if it gets boarded in May,
04:20then the finalization of the upcoming budget has to come in this MEFP.
04:25If I can give you the exact number,
04:27then the target of the next FPR,
04:30if we do not change it to 12,970,
04:33then it is of 15,000 billion rupees.
04:36This means that approximately 16% more growth is needed,
04:40if we reach 12,970,
04:43even if we reduce it by 6-700,
04:45because nominal growth next year too,
04:47if I think 6-7% inflation,
04:504%, which you will call in terms of real GDP,
04:55the total nominal growth of 10%,
04:58still you will have a gap of 5-6%.
05:01So that forms a very important basis for discussion,
05:04whether that 5-6% gap will come out of enforcement,
05:08whether it will come out of administrative measures,
05:10whether it will come out of policy measures.
05:12So the room for maneuverability is very less, even with the authorities.
05:16Now, all this discussion is also necessary.
05:20Then you also see that the real effective exchange rate,
05:23the rupee has also moved a little, it has gone to 1 of 4,
05:26because all this is happening in Islamabad.
05:28When they visit Karachi, I am sure there must have been a discussion on this too.
05:33Similarly, if you want to review the target of GDP,
05:35then you will also have to look at the macro numbers.
05:38Looking at LSN and what we saw,
05:41our previous 3-month data of 0.9% growth,
05:44and looking at agriculture, especially cotton,
05:47you will also have to review that.
05:49I think a lot of changes in the MEFP are necessary.
05:52And the further next 3-5 years of MEFP data will also vary,
05:58because the estimates of 2025 are enough in terms of nominal growth,
06:02and going on, they have varied.
06:04The policy space is very less.