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IMF denies tying bailout to compromise on Pakistan’s nuclear capability

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  • IMF Pakistan chief issues statement on delay in agreement.
  • Says Fund has not attached any strings as reported.
  • Talks focused on balance of payment issues, says Esther Perez.

ISLAMABAD: The International Monetary Fund (IMF) has rubbished claims that the multilateral lender had attached any nuclear-programme-related strings to the revival of a bailout stalled for months despite weeks-long talks between the two sides.

The lender is yet to approve the release of $1.1 billion originally due to be disbursed in November last year, leaving Pakistan with only enough foreign exchange reserves to cover one month’s imports.

Pakistan has been hosting an IMF mission since early February to negotiate the terms of the deal, including the adoption of policy measures to manage its fiscal deficit ahead of the annual budget due around June.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.

Veteran politicians Senator Raza Rabbani and former foreign minister Shah Mahmood Qureshi had raised concerns about whether the delay in the staff-level agreement with the Fund has anything to do with the country’s strategic assets including the nuclear and missile programmes.

They have asked the government to come clear on this issue.

In a statement released to the media on Sunday, IMF resident representative in Islamabad Esther Perez Ruiz denied attaching any strings to the External Fund Facility (EFF).

“Regarding recent speculation that programme discussions with the authorities for the ninth review under the IMF-supported programme may have covered Pakistan’s nuclear weapons programme, I want to be categoric that there is absolutely no truth to this or any insinuated link between the past or current IMF supported programme and decision by any Pakistani government over its nuclear programme,” the official said.

The IMF chief further said that the discussions have exclusively focused on economic policies to solve Pakistan’s economic and balance of payments problems, in line with the Fund’s mandate for promoting macroeconomic and financial stability.

‘No compromise on nuclear, missile programme’

On Thursday, Finance Minister Ishaq Dar promised that there would be no compromise on the country’s nuclear and missile programme.

The finance minister made the statement in the Senate in response to Senator Raza Rabbani’s questions about the delay in signing the agreement with the IMF.

Rabbani regretted that the upper House of the Parliament had “neither before nor today been taken into confidence on what are the conditionalities of the IMF” for extending the loan facility to Pakistan. 

He had termed the delay “absolutely out of the ordinary, extraordinary” saying: “The question arises […] if the delay is being made because of some sort of pressure to be exerted on Pakistan’s nuclear [programme].”

In response, Ishaq Dar told the special session in categorical terms that there would be no compromise on the country’s nuclear and missile programmes. 

“Let me assure you that nobody is going to compromise anything on the nuclear or the missile programme of Pakistan… no way,” he had added. 

The minister promised the moment the staff-level agreement and EFFP (Extended Fund Facility programme) was finalised, it would be placed on the website of the finance ministry. 

He made it clear that nobody had any right to tell Pakistan what range of missiles it could have and what nuclear weapons it could possess. 

“We have to have our own deterrence, as we represent the people of Pakistan and we have to guard our national interests,” he maintained.

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In a first for history, PSX crosses the 77,000 milestone.

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At 77,213.31, the benchmark KSE-100 hit an all-time high, up 1,005.15, or 1.32%, from the previous close of 76,208.16.

The government’s readiness to seal an agreement with the International Monetary Fund (IMF) following the budget was cited by analysts as the reason for the upward trend.

Experts anticipate that in an attempt to bolster its position for a fresh bailout agreement with the International Monetary Fund (IMF), the budget for the fiscal year ending in June 2025 would set aggressive fiscal goals.

Budget for Pakistan, 2024–2025
Pakistan’s budget for the fiscal year 2024–25, with a total expenditure of Rs18.877 trillion, was presented on Wednesday by Minister of Finance and Revenue Muhammad Aurangzeb.

The Finance Minister, Muhammad Aurangzeb, outlined the budget highlights. He stated that the GDP growth target for the fiscal year 2024–25 is set at 3.6 percent, while the inflation rate is anticipated to stay at 12 percent.

He stated that while the primary surplus is anticipated to be 1.0 percent of GDP during the review period, the budget deficit to GDP is forecast to be 6.9 percent over the period under review.

According to the minister, tax income collection increased by 38% in the current fiscal year, and the province will receive Rs7,438 billion. The Federal Board of income expects to earn Rs12,970 billion in revenue for the upcoming fiscal year.

In contrast to the federal government’s projected net income of Rs9,119 billion, he stated that the federation’s non-tax revenue projections are set at Rs3,587 billion.

The federal government’s total outlays are projected to be Rs18,877 billion, with interest payments accounting for the remaining Rs9,775 billion.

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Pakistan currently has $14.38 billion in foreign exchange reserves.

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Pakistan’s commercial banks’ reserves, which stood at $5.28 billion at the conclusion of the week ending on June 7, rose by US$174 million, according to a central bank statement.

Reserving US$6.2 million less, the SBP now has US$9.10 billion in reserves. The causes for the decline in the reserves it had were not disclosed by the central bank.

The SBP released a statement that stated, “SBP reserves decreased by US$ 6 million to US$ 9,103.3 million during the week ended on 07-June-2024.”

The State Bank of Pakistan’s (SBP) foreign exchange reserves were reduced by US$ 63 million as a result of repaying external debt, with the reserves standing at US$ 9.093 billion as of earlier on June 6.

The central bank spokesperson said in a statement that as of the week that concluded on May 31, the nation’s total liquid foreign reserves were $14.31 billion.

In terms of net foreign reserves, commercial banks have US$ 5.22 billion of the overall foreign reserves, according to the SBP.

SBP reserves dropped by US$ 63 million to US$ 9,093.7 million during the week that ended on May 24, 2024, according to the announcement.

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In the local market, the price of gold plummets to Rs240,700/tola.

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Gold with a 24-karat purity level has dropped by Rs1200/tola on the local market.

Each tola of 24-karat gold is now selling for Rs240,700, with a further drop of Rs1029 bringing the price of 10 kilos of gold to Rs206,361. These figures are courtesy of the All Sarafa and Jewelers Association.

Meanwhile, after a $2 decline on the global market, one ounce of gold will be valued $2315.

A tola of gold was worth Rs 600 more on Wednesday.

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