October 17, 2019

Pakistan shared details of CPEC loans with IMF: official

Islamabad: The International Monetary Fund (IMF) said Monday that it can fully obtain the loan and maturity provisions of the China-Pakistan Economic Corridor (CPEC) project, and its loans are controllable.

The resident representative of the International Monetary Fund in Teresa, Islamabad, at the National Press Club, addressed the Senior Press Forum and listed issues related to the Financial Action Task Force (FATF), the behavior of provincial spending and the insufficient strength of the council governmental. The main risk of $ 6 billion is 39 – monthly rescue plan.

She said Pakistan shared all the details of the CPEC loan with the International Monetary Fund and added that CPEC is primarily a private sector investment in energy and infrastructure. An official of the International Monetary Fund, answering a question, said that the energy project will certainly help the country solve the serious problem of energy shortage, which is a very positive aspect. She said the debt sustainability analysis showed that CPEC loans were manageable, but that the country’s overall debt situation was not sustainable.

Teresa Sánchez said the FATF, provincial spending behavior and the strength of the governing council are the main risks of the $ 6 billion rescue plan.

In response to a question, Ms. Sánchez said that fiscal consolidation and income mobilization, market-based exchange rates and social sector protection are the three basic pillars of the new International Monetary Fund’s plan, He added that fiscal consolidation should be income-oriented. To solve the fiscal deficit problem because the country’s tax / GDP ratio is very low, it is necessary to increase revenues by eliminating tax exemptions and privileges.
An official from the International Monetary Fund said there is a strong need to strengthen coordination with the provinces to ensure that they reduce spending and provide a budget surplus for the federal government. She said the IMF does not have conditions to change the resource allocation formula of the National Finance Committee, but has in fact obtained the promise of fiscal federalism based on the memorandum of understanding signed by the federal and provincial governments on the income surplus and fiscal coordination. Improve income.

Ms. Sánchez said that one of the most important pillars of the IMF plan is the market-based exchange rate. The central bank is at the bottom to achieve price stability by promoting actions against inflation.

Speaking of the main risks facing the plan, Ms. Sanchez said that there are not many ruling parties in parliament, the financial slide, large delays in short-term debt and the FATF gray list can have an impact on Capital inflows and endanger the World Bank, Asian development. Banks and major bilateral partners provide financial guarantees in accordance with the plans of the International Monetary Fund.

She said the first revision of the plan will be completed in December of this year. When asked if the income gap in the first month of the fiscal year reached Rs 14 billion, if this trend continues, it will trigger the IMF’s appeal for a small budget. She said the fund plan is not based on the performance of a month. .

In response to a question, he said that the increase in prices of public services was a complex problem because it increased revolving debt, made the mobility of the entire electricity sector more rigid and demanded that the government increase loans. In the end, this has led to a general public debt that is worryingly 80% of GDP. He stressed that the efficiency of the energy industry is essential for the country’s industrial sector and its growth, and added that around 30% of revenues are used to pay interest, and there is little space in the social sector, especially in health and education

With regard to the Special Organization, Ms. Sánchez said that the International Monetary Fund should ensure that countries have a legal framework conducive to preventing money laundering, and that when a country seeks support, it should consider this aspect. “The International Monetary Fund can continue to exchange gray or black lists with countries, but this will have an impact on capital inflows,” he said.

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