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Almost 90pc of Geneva pledges are project loans, Dar reveals
Dawn.com Published January 11, 2023 Updated about an hour ago
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Prime Minister Shehbaz Sharif, along with members of the cabinet, addresses a press conference in Islamabad on Wednesday. — PID
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Finance Minister Ishaq Dar revealed on Wednesday that almost 90 per cent of pledges made by the international community at a donors’ conference in Geneva for flood-hit Pakistan were project loans that will be rolled out over the next three years.
Earlier this week, the international community committed to give Pakistan a huge sum exceeding $10bn to help it recover from last year’s devastating floods. Officials from some 40 countries as well as private donors and international financial institutions had gathered for the meeting, co-hosted by Islamabad and United Nations.
During a press conference today alongside Prime Minister Shehbaz Sharif and other members of the federal cabinet, Dar said that $8.7bn of the pledges were loans. He did not reveal what the terms of these loans were. However, the prime minister said “we expect the terms to be lenient”.
Dar highlighted that project loan financing had already crossed $8bn, which included commitments from the Islamic Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, and the World Bank.
“I am not incorporating the pledge made by the Saudi Development Bank on purpose here because it is not clear whether their announcement of $1bn pertains to programme lending or project loan,” Dar said.
Responding to a question on how soon he expects these pledges to turn into actual inflows, the premier said that depended on “us”.
“The faster we can design and create feasibilities and impress them [donors], the faster these pledges will materialise.”
These pledges will not solve Pakistan’s immediate dollar liquidity crisis as is being touted by some government officials, according to a Dawn editorial.
With the SBP reserves already down to around $4.5bn or equivalent to less than four weeks of imports after recent loan payments to two UAE-based banks, the country direly needs an immediate cash injection. That — and probably the flood recovery pledges from multilateral lenders — is unlikely to materialise unless Islamabad mends its tense relationship with the International Monetary Fund (IMF).
During the presser, the finance minister also talked about a meeting he had with the IMF team on the sidelines of the Geneva moot, revealing that discussions over the already delayed ninth review for the release of $1.2 billion revolved around the government’s ability to meet the revenue targets previously determined for the ongoing fiscal year after the Federal Board of Revenue fell short in December.
This gap in revenue collection was a result of a high court invalidating the super tax imposed by the government in June last year, according to the finance minister. He said that his team informed the IMF that Pakistan could recover the revenue shortfall in a staggered manner after the Supreme Court ruled on the super tax. “We are not changing the fiscal budget target and we will achieve it,” he asserted.
However, the IMF still wanted the government to take fiscal measures and cut back some subsidies, Dar added. “We have identified some fiscal measures but there will be no burden on the common man. They will be very targeted and categorical,” he assured.
Dar asked naysayers to stop spreading panic over “default” rumours, saying such elements must consider national interest above everything.
