Loud Thinking

IMF loan not to increase external debt: Dar

The News dated 18 July, 2013.

ISLAMABAD: Federal Minister for Finance Senator Muhammad Ishaq Dar on Wednesday said that the loan from the IMF would not increase Pakistan’s external debt as the new loan would be utilised to return the previous loan.
Talking to Australian High Commissioner Peter Heyward, who called on him here on Wednesday, Dar said that he was optimistic about achieving the ambitious revenue target of Rs2,475 billion set in the budget, which is 25 percent over the previous budget.
He said that medium-term framework announced in the budget envisages a reduction of debt by two percent every year in the overall public debt, which is presently 63 percent of the GDP and way above the 60 percent permissible under the fiscal debt and responsibility law.
Given our sincerity of purpose, hard work and our determination to remain on the right track, “I am optimistic that macro-economic challenges being faced by the country are manageable,” he added.
The minister further said that smooth passage of the budget, successful conclusion of an IMF programme and payment of Rs322 billion to private power producers had been some of the major initiatives of the government of Prime Minister Nawaz Sharif to address the challenges facing the economy of the country.
Dilating on the IMF programme, Senator Ishaq Dar said that the terms of the agreement were within the broad parameters of the PML-N manifesto. “Even if we had not entered into any IMF programme, we would have taken similar measures,” he added.
“The IMF programme success has been well taken by the financial world,” said the finance minister.The high commissioner said that Australia was keen to expand its economic relations with Pakistan and showed interest in the areas of mining, energy and agriculture.Peter Heyward said that Australia was keenly watching the development and would support Pakistan.

Mr. Ishaq Dar your above statement at the headline virtually exposes your love for the IMF begging bowl and also reveals that to how much extent you can go ( to prove night as day) for the IMF loan.

Now also please read my letter published by the daily “Dawn” on 18 July, 2013.

IMF: exploring other options

FROM THE NEWSPAPER

Published
2013-07-18 07:14:24

I WOULD like to draw the attention of Finance Minister Ishaq Dar to reports about the IMF which extends zero interest rates to low-income country loans.

I am convinced that it is a disaster recipe for our economy to seek loan on an exorbitantly high rate of three per cent from the IMF to repay its old loan.

Moreover, the finance minister’s argument that this was the only option to avoid a default does not hold water as not one but many viable options exist.

Second, default is better than the destruction of the very foundations of the nation’s economy. In the recent past, many countries have bravely negotiated with the international lending agencies and succeeded in getting reduction of up to 60 per cent of their loans.

However, in Pakistan’s case our loan amount is increasing with an unbelievable speed. It was recently reported that when the PPP government took over in 2008 our debt liability was $40 billion and now it has increased to more than $60 billion.

The question is why did Ishaq Dar remain silent as the PML-N’s financial expert and senator during the PPP tenure when it crossed the legal and constitutional limit of six per cent debt-to-GDP ratio?

This was a grave violation of the law. Had the PML-N taken up this issue with the Supreme Court, the PPP government would have been immediately dismissed.

So how can he now absolve himself of this financial mess by just saying that he took over the government with the nation’s economy in a very bad shape?

Also, how can history exonerate the PML-N, in general, and Ishaq Dar, in particular, from not playing a pro-Pakistan role when the then government was playing havoc with the country’s economy?As such, there is only one way to atone for our past acts of commissions and omissions by not burdening further the nation’s economy with extremely and unprecedented expensive loans of the IMF.

There is still time to explore other options to avoid the IMF loan. Nothing is impossible. Where there is a will there is a way.

NAYYAR UDDIN AHMAD Lahore