Pakistan’s finance minister said military cooperation with the United States over the US withdrawal from Afghanistan had given Imran Khan’s government “some leeway” to delay unpopular IMF reforms.
Islamabad is in talks with the IMF to release the next tranche of funding under a $ 6 billion loan program as Pakistan struggles to control inflation and recover from the shock of the pandemic.
Officials are seeking U.S. support in the form of financial backing from the Washington-based international financial institution in return for helping President Joe Biden withdraw all U.S. troops by September 11 and for bring the Taliban to the negotiating table.
Shaukat Tarin, Khan’s fourth finance minister in three years, said the IMF has been receptive to Islamabad’s request to halt increases in electricity tariffs and sales taxes that have hit the poor hard from Pakistan.
“What we don’t need is an additional burden on our poor,” said Tarin. “We have spoken to American officials and they are ready to help.”
Tarin, who took office in April, resumed office after negotiating an IMF bailout in 2008 when Pakistani-American cooperation was at its peak.
“In 2008 we obviously had the United States and everyone on my right because of the war on terror. . . Today things are different, ”said Tarin.
Pakistan’s relations with the United States have deteriorated after the Trump administration slashed security assistance by $ 2 billion in 2018, citing its continued support for the Taliban. Trump tweeted that Pakistan “only gave us lies and deception”.
Since then, however, Pakistan has played an important role in helping the United States end its war in Afghanistan.
Jake Sullivan, the White House’s national security adviser, said this week that the United States and Pakistan have had “constructive discussions” on “the future of American capabilities.”
These include a base in Pakistan that Washington has asked Islamabad to use to launch counterterrorism operations in Afghanistan.
Pakistan business columnist Khurram Husain said: “Pakistan will need to leverage some kind of geopolitical muscle to roll back the IMF. They already have.
Tarin said the resumption of a US military training program with Pakistan indicated that relations were heating up. He also said the World Bank is expected to approve at least $ 800 million in new loans by the end of the month.
Pakistan’s poor have been hit with double-digit inflation, and their dissatisfaction with the economy is a political responsibility for the Khan government.
“The [economic] growth this year will probably be 4 percent, but we need more, ”said Tarin.
Pakistan has made progress in solving its financial woes, but the fallout from the pandemic and political unrest threatens to derail the reform agenda, rating agency Fitch said last month, maintaining its outlook on the Pakistan stable at B-.
Islamabad has been able to access external financing in part due to its compliance with the IMF program and its progress in combating terrorist financing.
Pakistan is on the gray list of the Financial Action Task Force, the world’s leading counterterrorism watchdog. Islamabad was “on the verge of completing” meeting FATF demands, people familiar with the talks said.
“As President Biden withdraws his troops, Pakistan’s influence over the United States has improved,” said Asfandyar Mir, analyst for South Asia at Stanford University.
“The United States is in desperate need of assistance with the Afghan peace process and the fight against terrorism. He has no choice but Pakistan.
Additional reporting by Farhan Bokhari in Islamabad