The International Monetary Fund Said on Monday

The International Monetary Fund (IMF) said on Monday that it has full access to the borrowing and maturity terms of the China-Pakistan Economic Corridor (CPEC) project, and that the loans are manageable.

Teresa Daban Sanchez

IMF's resident representative in Islamabad, attending a senior press conference of the Government Press Club, said that the Financial Action Task Force (FATF), state spending patterns and the power of the government's inadequate parliament Issues related to the $ 6 billion -month bailout program. She added that while Pakistan shares all details of IMEC and CPEC financing, CPEC is mostly private sector energy and infrastructure investment.

An IMF official said that in response to the question, there was no doubt that the energy project would help the country solve the sudden power shortage problem, which was a very positive aspect. She explained that although the CPEC loan is manageable, the overall debt situation of the country is not sustainable, according to debt sustainability analysis.

Teresa Sanchez, the state spending behavior FATF, said that the power of the government's inadequate congressional bailout program, Sanchez added that fiscal consolidation and revenue mobilization, market-based exchange rate and social sector protection should be monetization-oriented in order to address the deficit problem with the three pillars of the new IMF program.

The country has a very low tax rate to GDP and has to eliminate tax exemptions and privileges and increase its income. An IMF official said that local governments are urgently required to work closely with the government to reduce budgetary expenditure and provide funding to the federal government. 

National Finance Committee's

She said the IMF did not provide a condition for changes to the National Finance Committee's resource allocation formula, but the federal and state governments pledged federalism under a signed memorandum on revenue surplus and tax harmonization. Improved revenue collection. Sanchez said one of the most important axes of the IMF program is market-based exchange rates with central banks to achieve price stability through future-oriented measures to deal with inflation.

Speaking of major reforms in the program, she enumerated financial discipline in the public sector, autonomy to the central bank, improvement of the energy sector, strengthening anti-corruption agencies and implementing fiscal management for FATF compliance. Speaking of the main risks of the program, Sánchez pointed out a gray list that could affect the absence of a majority in Congress, financial slippage, the need for large rollovers in short-term borrowing, and the capital inflow of FATF to Pakistan.

Financial guarantees under the IMF program of the World Bank, the Asian Development Bank and major bilateral partners. She said the first review of this program before December of this year will be completed. Asked if the IMF would require a mini budget with a budget of less than Rs 14 billion in the first month of the fiscal year if the trend continues, she said the funding program was not based on a one-month performance.

Required liquidity for the bank 's

She said the increase in utility prices was a complicated problem because it required liquidity for the bank 's debt and the entire power sector, and more borrowing by the government. After all, this has already contributed to the overall public debt, which surprisingly amounted to 80% of GDP. She emphasized that the efficiency of the power sector is particularly important for the national industrial sector and growth, emphasizing that about 30% of the income will pay interest and there is little room for the social sector, especially in the health and education sectors.

Sanchez said the IMF should make sure that countries have a legal system to prevent money laundering and that this aspect should be considered when the country asks for assistance. The IMF board said it would review the money laundering and terrorist financing issues because it hindered the tax system, adding that "the IMF will continue to trade nations in gray or black lists, but it will affect capital inflows.

She said it is unfortunate that Pakistan has used 18 IMF programs since 1958 and that only one program from 2013 to 2016 has been successfully completed and successfully completed. She said inflation will get better and short-term growth will be restrained, but the IMF program aims to stabilize the economy, inflation will retreat for a long time and growth will recover in the long term.

Asked if the IMF sought to cut the defense budget, the fund was not involved in micro-management, but authorities were promised to guarantee social spending for the vulnerable. Sanchez said Pakistan followed growth based on consumption and investment-grade GDP.

This growth model can not bring about sustainable growth," he said. "As the fiscal deficit and the current account deficit widen, the deficit and the current account deficit have increased due to low discount rates and high exchange rates," he added.
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