Pakistan Prime Minister Yousuf Gilani okays IMF bailout package
Pakistan Prime Minister Yousuf Gilani has given the green signal to finalise details of an economic bailout package with the International Monetary Fund and a six-member delegation will leave for Dubai next week to negotiate, official sources said here yesterday.
Adviser on Finance Shaukat Tarin will head the team that will hold talks with IMF officials, a source in the Prime Minister Secretariat said, requesting anonymity.
“The package has become a compulsion for Pakistan to meet balance of payment needs and pay instalments, which are due immediately,” he added.
He said that the Pakistani team would do its best to get the IMF conditions for bailout package softened to the maximum extent, as the Fund wanted to provide credit to Pakistan at a hefty interest rate with tough conditions.
“The Pakistani delegation will apprise the IMF officials of the economic situation in the country arising out of the difficulties being faced by Islamabad in repayments because of devaluation of Pakistani rupee,” the official said. “Pakistan had to devalue its currency by 32% during the past half decade,” he pointed out.
Moreover, the official said, the Pakistani currency was also losing its value because of growing inflation and this was over and above the 32% declared devaluation of Pakistani rupee. He said the Pakistani team would effort to persuade the IMF officials to grant bailout package at the minimum interest rate.
According to other sources Pakistan would get $9.6bn IMF package under which funding could not be rescheduled.
As per proposed conditions of the funding, Pakistan would also furnish to the IMF 48 hours before
signing the funding agreement the details of all loans it got under the bilateral and multilateral arrangements, it adds.
The proposals also mentioned if Pakistan accepted the IMF funding, it would have to reduce the defence budget by 30% between 2009 and 2013 gradually while the number of posts in the government and semi-government departments entailing pension would also have to be decreased from 350,000 to 120,000.
Meanwhile, a senior Pakistani diplomat in Washington quoted the IMF as saying that while it has not asked Pakistan to cut military spending by a third, it has urged the country to take a number of painful economic measures.
Apparently, the IMF is willing to help Pakistan on the condition that it will have a major say in the country’s economic policies. The conditions include allowing six IMF and two World Bank directors to oversee preparations for the country’s next budget.
They would also have a say in the affairs of the State Bank of Pakistan as well.
IMF officials will also monitor tax collection at the provincial level.
Among the reforms suggested by the IMF is a proposal to reduce the number of pensionable government jobs by almost half.