As Pakistan continues to struggle with repercussions of the fast-depleting foreign exchange reserves, US Congressman Al Green urged the Joe Biden-led government to play a role in “providing aid” to the South Asian nation through the International Monetary Fund (IMF) and World Bank.
Speaking at Congress Finance Committee, Green said that Pakistan is a case study on the effects of climate change.
“As you know, Pakistan has suffered greatly from the floods that took place, beginning in June of 2022. I am going to ask you, if you were to use your good offices to help Pakistan, it clearly is in dire need of aid from the IMF and the World Bank as well,” he said.
The US lawmaker lamented that this global warming is something that the US may deny, but Pakistan is still suffering. “It emits about 1% of global greenhouse gases; we emit more than 10%, yet Pakistan suffers. Please do what you can,” he urged the authorities concerned to play their part.
The South Asian nation has been trying to salvage a loan program with the IMF to avoid default. According to Columbia Threadneedle Investments, Pakistan faces about $22 billion of external debt payments for the fiscal year 2024, about five times its reserves.
The IMF’s $1.1 billion funding to Pakistan, part of the $6.5 billion Extended Fund Facility agreed in 2019, has been held up since November.
In response to Green’s request, United States Secretary of the Treasury Janet Yellen said: “We’re supportive of the IMF’s work in Pakistan and there is a programme that is helping them deal with the devastation from the floods and their pre-existing fiscal and monetary problems, and we’re certainly supportive of the IMF’s work there.”
A few days ago, Pakistani-American Diplomat Tahir Javed said he met Green.
During the meeting, Javed informed him that the coalition government had presented the budget at a time when its foreign exchange reserves were severely constrained. The government will face extreme difficulty in fulfilling the commitments made in the budget for the next fiscal year 2023-24.
The Pakistani-American diplomat said that keeping such things in mind, the US should force the IMF to release the South Asian nation’s pending tranche as soon as possible.
Pakistan, home to 250 million, is struggling to satisfy the Fund on three counts, starting with a budget unveiled on June 9, before its board reviews whether to release at least some of the $2.5 billion still pending under a lending programme expiring this month.
The Washington-based lender has raised serious objections over the budgetary framework for 2023-24 and asked the government to increase both tax and non-tax revenues efforts, the Ministry of Finance high-ups informed the Senate Standing Committee on Finance and Revenues on Tuesday, The News reported.
A senior Ministry of Finance official conceded before the committee that the IMF was not satisfied with the budgetary framework for 2023-24, so they would have to defend increasing the petroleum development levy up to Rs869 billion for the next fiscal year against revised estimates of Rs542 billion in the outgoing financial year.
Pakistan’s EFF bailout programme with the IMF will expire on June 30.
