Dialogue between Farogh Naseem and IMF mission chief ends inconclusively

Nov 11, 2021: The second round of talks between Law Minister Dr. Forough Naseem and the head of the International Monetary Fund’s mission for Pakistan, Ernesto Ramirez Rego, to restore the $6 billion Extended Fund Facility (EFF) ended inconclusively, as the two sides failed to reach a new agreement.

The two sides could not agree on a consensus draft for State Bank of Pakistan (Amendment) Bill, 2021 The meeting participants told press that Tuesday’s meeting lasted about an hour in which Pakistan proposed that the federal government retain the right to set policy direction and set inflation targets to the central bank.

The draft bill passed by the cabinet remained silent on the question of inflation target. The SBP bill appears to be an attempt to consolidate power in the name of sovereignty.

The finance ministry on Wednesday gave the final read to its position vis-à-vis the SBP amendment bill while keeping in mind the discussions that took place with the IMF a day earlier, the constitutional requirements, and the prevailing legal framework, they added.

“The position will be shared with the IMF mission chief and on the basis of it a final meeting on the subject of the SBP bill will take place soon.”

Sources said that the head of the IMF mission asked the Pakistani team to provide details about the provisions of the bill which are in conflict with the constitution and laws like the Companies Act 2017.

Sources said that the hands of the head of the IMF mission are also tied as the IMF board will try to implement the terms of the loan during the 5th review of the program. Sources said that the concerned authorities considered December 22 and January 14, 2022 as alternative dates for the board meeting, subject to implementation of all pre-emptive measures.

When contacted, IMF Resident Representative Teresa Duban Sanchez said that the IMF Code of Conduct does not the details to be discussed with the media.

She was asked to comment on whether it was true that Tuesday’s meeting between the head of the IMF mission and the law minister on the SBP bill was fruitless and the government told the IMF that it cannot pass the SBP Amendment Bill in its present form to the parliament.

Yousuf Khan, Additional Secretary (in-charge) of the Ministry of Finance and official spokesman, did not answer questions, including whether it was still possible to complete the sixth review and the 2021 calendar year for the IMF board. 

The government has once again told the IMF that it will retain the option of borrowing from the central bank, as the government cannot afford to default on the local currency or exploit it to commercial banks. Sources said that the head of the IMF mission was not ready to accept this change.

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