ISLAMABAD: With the economic situation getting worse, Chief of Army Staff General Qamar Javed Bajwa has reached out to the US administration with a request to assistance in securing an early dispersal of a tranche of bailout package from the International Monetary Fund in an effort to stabilise the dwindling economy of Pakistan.
While Prime Minister Shehbaz Sharif has been mostly fighting on the political front for survival of his fragile government, the COAS has taken up the job to help stop the fast depleting foreign exchange reserves.
According to security sources, the army chief spoke by phone with US Deputy Secretary of State Wendy Sherman earlier this week. The sources said that during his contact with the US administration, Gen Bajwa made an appeal to the White House and the Treasury Department to push the IMF to immediately supply nearly $1.2 billion that Pakistan is due to receive under a resumed loan programme.
The IMF has already granted Pakistan “staff-level approval” for the loan in question on July 13. But the transaction — part of the IMF’s $6 billion Extended Fund Facility for Pakistan — will only be processed after the multilateral lender’s executive board grants a final nod.
The IMF is going into recess for the next three weeks and its board will not convene until late August. No firm date has been set for announcing the loan approval for Pakistan, according to an IMF official.
For Islamabad, time is of the essence as the rupee has been plummeting against the dollar, and the country has less than $9 billion in foreign reserves left, covering under two months of import bills.
According to the IMF official, there is a major difference between staff-level approval and board approval.
“Our stakeholders, the countries that take the vote as to whether they are supporting this or not, make the final decision. This is a difference. So the legally binding step is a board approval, not the staff level agreement,” said the official.
The US is the largest shareholder in the fund, founded in 1945 while China is the second biggest economy of the world.
The army chief’s appeal comes in the wake of separate meetings between senior civilian Pakistani and American officials in July, none of which managed to negotiate an early disbursement of funds.
“Several senior Pakistani officials have met the US and other key stakeholder nations in the IMF and World Bank in the past week to register concerns about the timing of IMF Executive Board decisions, pressing to expedite review of Pakistan’s progress on prior actions,” said an official familiar with the proceedings.
According to sources, the lack of progress in those meetings spurred the army chief to get Washington’s attention when other emissaries could not deliver.
Since 1958, Pakistan has embarked on 22 separate IMF programmes but completed just one. However, while officials familiar with the exchange admitted that the currency and foreign reserves situations were worrisome, they also reported progress on the IMF finance facility.
“If the government can get through this tough month, there are good opportunities to stabilize the economy, but August will not be easy,” the sources said.
Meanwhile, State Bank Acting Governor Murtaza Syed, in a media interaction said that the fear of Pakistan’s default is overblown. He said the financing needs for the next 12 months will be met.
However, Syed admitted that Pakistan would rather get the IMF funding sooner than later but also detailed that Islamabad is negotiating with Saudi Arabia and China — two countries that the army chief visited recently — to score supplemental financing.
