Pakistan refuses IMF's proposal to renegotiate loan fearing new conditions

Pakistan FM Shaukat Tarin has said that he has refused to agree with the International Monetary Fund's new proposal to the cash-strapped country to renegotiate its loan programme

Pakistan Finance Minister Shaukat Tarin has said that he has refused to agree with the International Monetary Fund's new proposal to the cash-strapped country to renegotiate its loan programme, fearing that the global lending agency might impose new conditions.

Tarin made the remarks on Monday during a meeting of the Senate Standing Committee on Finance, which completed clause-by-clause reading of the Finance Supplementary Bill 2021, introduced to impose Rs 375 billion worth of new taxes under a condition of the IMF loan programme, the Express Tribune newspaper reported.

Pakistan and the IMF had signed a USD 6 billion deal in July 2019 but the programme was derailed in January 2020 and restored briefly in March, 2021 before again going off the track in June, 2021.

From June to August there were no serious discussions between the two sides.

Tarin informed the committee that the sixth review date was January 12 but Pakistan took a three-week extension since both bills were in parliament for approval.

When I approached them for an extension, they (IMF) asked to renegotiate the programme, he was quoted as saying by the paper.

The minister said that he did not agree to renegotiations, fearing that the IMF might impose new conditions.

He added that the IMF had now agreed on a January 28 or January 31 date for taking Pakistan's case to its board and the final date will be conveyed to us soon.

The IMF's desire to seek renegotiations suggests that the government does not have much time to meet all prior actions, posing a challenge to secure approval of the State Bank of Pakistan (SBP) Amendment Bill 2021 from the Senate before the new tentative dates.

Under Article 70 (3) of the Pakistani Constitution, any house of parliament has 90 days to approve a bill from the date of introduction.

The National Assembly Standing Committee on Finance on Monday approved the SBP Amendment Bill, which once cleared by the National Assembly, will be laid before the Senate for approval.

If the Senate approval is not secured this month, it could create problems for the government, which is also facing a new challenge in the shape of replacement of IMF Mission Chief to Pakistan Ernesto Rigo.

The sixth review was scheduled to be approved by the IMF board in June last year but has been lingering on due to delay in implementing the IMF's conditions.