Pakistan finance minister hints at ‘Plan B’ as revival of IMF bailout hangs in balance

In this handout photograph, taken and shared by the Ministry of Finance, Pakistan Finance Minister Ishaq Dar (center) addresses the post-budget press conference in Islamabad on June 10, 2023. (Photo courtesy: Government of Pakistan)
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Updated 10 June 2023
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Pakistan finance minister hints at ‘Plan B’ as revival of IMF bailout hangs in balance

  • Ishaq Dar says Pakistan is expecting transfer of $2 billion and $1 billion from Saudi Arabia and UAE respectively before June 30
  • Minister says the government has levied only $697 million additional taxes in the budget to promote documentation of economy

ISLAMABAD: Pakistan’s finance minister Senator Ishaq Dar said on Saturday his government was looking for a ‘Plan B’ in case the International Monetary Fund (IMF) did not release a $1.1 billion tranche of the stalled $6.5 billion bailout program Islamabad secured in 2019.

The statement came a day after the minister presented a Rs14.46 trillion ($50.4 billion) budget for the next fiscal year, setting a tax collection target of Rs9.2 trillion ($32 billion) that is 23 percent higher than the last year’s and envisioning a 3.5 percent GDP growth.

The government’s fiscal plan was unveiled amid record inflation, a depreciating currency, and fast-depleting foreign exchange reserves. While it stated its intention to provide relief to financially vulnerable segments, the budget numbers were aimed at securing the tough IMF loan amount to stave off a balance of payments crisis.

“A Plan B is always there and that is self-reliance,” the finance minister said, addressing a post-budget press conference in Islamabad. “Pakistan will not default.”

“If we don’t get it, we have a plan ready …. we hope to receive $1.1 billion [tranche], but there is no chance for the tenth review now,” the finance minister said. “We will only be fair to get the money after the ninth review.”

Pakistan’s IMF bailout program has been stalled since November and is set to expire on June 30, with its 9th and 10th reviews still pending the IMF board’s approval.

The finance minister said Saudi Arabia and the United Arab Emirates (UAE) had given a commitment of $2 billion and $1 billion respectively to the IMF as external financing support to Pakistan. 

“We expect if this amount was not transferred to Pakistan by June 30, it will come next year then,” he said, clarifying that debt rescheduling from the multilaterals was not on the cards.

“We can always negotiate with the bilateral for an ease-out.”

The finance minister clarified that there was no need to reschedule domestic loans because it would be a “serious issue” if a sovereign country could not fulfil “requirement of own currency.” 

He said the nation would have to “learn to live” as the country could not print dollars to repay external debts.

“We are trying to mobilize exports and remittances for the external debt [repayments],” Dar said.

About the 3.5 percent growth target, he termed it modest, realistic and in line with the IMF projection, admitting that servicing was one of the biggest items in the budget that the government was “trying to reverse.”

The government has paid special attention to agriculture and information technology (IT) sectors in the budget and given them tax exemptions on seeds and the import of machinery, according to Dar.

The economy is out of the woods now as hectic efforts by the government halted further decline of the economy.

He defended the government’s tax and non-tax revenues as “realistic and achievable” that were set after thorough consultations with stakeholders.

The budget levied new taxes of just Rs200 billion ($697 million) as the tax revenue had increased from Rs7,200 billion in the previous fiscal year to Rs9,200 billion.

“These 200 billion rupees taxes are mostly to promote documentation or fix an anomaly. This is not inflationary,” he said, adding that Rs900 billion out of Rs1,074 billion subsidies allocated in the budget were only meant for the power sector.

“This was a major stumbling block between us and the IMF, we have to focus on it,” he said. “No new major subsidy is being given.”


PSL matches to resume on May 17 after India-Pakistan ceasefire

Updated 5 sec ago
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PSL matches to resume on May 17 after India-Pakistan ceasefire

  • PCB initially decided to move remaining eight PSL games to United Arab Emirates
  • Last week PCB said it had postponed PSL matches on advice of PM Shehbaz Sharif

KARACHI: The chairman of the Pakistan Cricket Board said on Tuesday matches of the Pakistan Super League would resume from May 17 after being disrupted in the wake of conflict with archrival India.

The PCB initially decided to move the remaining eight PSL games to the United Arab Emirates, but last week said it had postponed the matches on the advice of Pakistan Prime Minister Shehbaz Sharif.

India and Pakistan have clashed since India struck multiple locations in Pakistan last week that it said were “terrorist camps” in retaliation for a deadly attack in Indian-administered Kashmir last month, in which it said Islamabad was involved. Pakistan denied the accusation but both countries exchanged cross-border firing and shelling, sent drones and missiles into each other’s airspace and left dozens of people dead.

A fragile ceasefire was holding between the neighbors after the agreement was reached on Saturday, following diplomacy and pressure from the United States.

“HBL PSL X picks up from where it left off! 6 teams,” PCB chairman Mohsin Naqvi wrote on X.

“Get ready for 8 thrilling matches starting 17th May, leading up to the Grand Final on 25th May.”

On Monday, Indian cricket authorities also announced that the Indian Premier League (IPL) cricket tournament, suspended for a week amid fighting between India and Pakistan, would resume on May 17.


Pakistan says US pushed India ceasefire over fears latest fighting could become ‘filthy’ war

Updated 57 min 26 sec ago
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Pakistan says US pushed India ceasefire over fears latest fighting could become ‘filthy’ war

  • India and Pakistan engaged in four days of fighting last week, pounding each other with fighter aircraft, missiles, drones, artillery fire
  • Following ceasefire, Deputy PM Ishaq Dar says Islamabad wants to take “process forward in honorable way, with dignity for both sides”

ISLAMABAD: Pakistan’s Deputy Prime Minister and Foreign Minister Ishaq Dar said this week Washington had pushed for a ceasefire between Pakistan and India over fears the latest military confrontation between the nuclear-armed neighbors could turn into a “filthy” all-out war. 

India and Pakistan engaged in four days of armed conflict last week, the worst between them since 1999, pounding each other with fighter aircraft, missiles, drones and artillery fire. The conflict erupted after weeks of tensions over an attack in Indian-administered Kashmir on April 22 that India blamed on Pakistan. Islamabad denies involvement.

India struck multiple Pakistani cities on Wednesday with missiles, claiming it had targeted “terrorist” camps in response to the April 22 attack. Islamabad said 31 civilians were killed in the assault and vowed to retaliate, saying it had shot down five Indian fighter jets. Things came to a head on Saturday morning, when Pakistan said India had attacked three bases, and it struck back with attacks on multiple bases in India including a missile storage site in India’s north.

Hours later, US President Donald Trump announced he had brokered a ceasefire between the two states, calming fears of an all-out war.

Speaking to American news channel CNN in his first interview since the ceasefire, Dar said US Secretary of State Marco Rubio told him on May 10 that India was ready to stop the fighting.

“After having seen our escalation, rather our counter-escalation in defense, I think certain capitals, particularly the US, realized it could be a really filthy next moves,” Dar said in the interview which aired on Monday night.

When asked what drove India to agree to a ceasefire, Dar said New Delhi must have realized “how serious the damage was on their side” after Islamabad dealt heavy losses to the Indian military in air combat and on the ground. 

“I’m sure they would have realized that they had miscalculated,” he added. 

Pakistan’s military has said it targeted several Indian military sites on Saturday and destroyed an S-400 missile defense system as part of its retaliatory ‘Operation Bunyan-un-Marsoos,’ which translates to “Wall of Lead” in Arabic. 

Speaking about the Indus Waters Treaty, which India has unilaterally suspended during the latest tensions, Dar reiterated Islamabad’s position that it would be considered an “act of war” if India diverted or stopped its flow of waters.

Brokered in 1960 by the World Bank, the IWT grants Pakistan rights to the western rivers — Indus, Jhelum, and Chenab — for irrigation, drinking, and non-consumptive uses like hydropower, while India controls the eastern rivers — Ravi, Beas, and Sutlej — for unrestricted use but must not significantly alter their flow. 

India can use the western rivers for limited purposes such as power generation and irrigation, without storing or diverting large volumes, according to the agreement.

When asked whether the two countries would go to war again if the water-sharing treaty was not resolved, Dar said:

“There are certain times when you have to take some very serious decisions,” he said. “Now, let’s look forward positively. We want to take the whole process forward in an honorable way and with dignity for both sides.”

Pakistan and India have a history of bitter relations. They have fought two of their three wars over Kashmir, a region split between them, since gaining independence from British colonial rule in 1947. Both acquired nuclear weapons in 1998.


Trump’s mediation offer renews global focus on Kashmir after India-Pakistan escalation

Updated 13 May 2025
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Trump’s mediation offer renews global focus on Kashmir after India-Pakistan escalation

  • Analysts say Trump’s offer brings global spotlight on Kashmir conflict, “a diplomatic coup for Pakistan”
  • India has always insisted Kashmir is India’s internal issue and opposed any third-party intervention

SRINAGAR, INDIAN-ADMINISTERED KASHMIR: A series of military strikes last week by India and Pakistan brought the nuclear-armed rivals closer to a broader war. The possibility of a nuclear conflagration seemed real and the fighting only stopped when global powers intervened.

Experts say the crisis deepened the neighbors’ rivalry as both crossed a threshold with each striking the other with high-speed missiles and drones. The tit-for-tat strikes also brought Kashmir again into global focus, as the US President Donald Trump offered mediation over the simmering dispute that has long been described as the regional nuclear flashpoint.

Paul Staniland, South Asia expert and a professor of political science at the University of Chicago, said the four days of fighting shows that “India now feels substantial space to directly target Pakistan, as well as that Pakistan is willing to escalate in response.”

Unlike in past years, when fighting was largely limited to Kashmir, the two armies last week fired missiles and drones at each other’s military installations deep inside their cities and exchanged gunfire and heavy artillery along their frontier in Kashmir.

Dozens of people were killed on both sides. Each claimed it inflicted heavy damage on the other and said its strikes met the country’s objectives.

 

 

Trump touts a possible ‘solution’ for Kashmir

The fighting began Wednesday after India retaliated for last month’s attack that killed 26 people, mostly Hindu tourists, in Kashmir, a Himalayan territory claimed in entirety by both nations. India blamed Pakistan for supporting the attackers, an accusation Islamabad denied, saying no evidence was shared.

The Indian military said it could again strike Pakistan if it felt threatened. Pakistan’s military also warned against any violation of the country’s sovereignty and vowed to respond.

Pakistan and India have fought two wars over Kashmir and the specter of two nuclear-armed foes once again trading blows over the region alarmed the international community. Trump on Saturday broke news that the two countries had agreed to stop fighting after US-led talks. 

On Sunday, Trump once again offered to help and said he will work to provide a “solution” regarding the dispute over Kashmir.

Pakistan thanked the US and Trump for facilitating the ceasefire. India, however, has not said anything about Trump’s mediation offer and only acknowledged the ceasefire was reached after military contacts with Pakistan.

Trump’s Kashmir offer also provoked criticism against Prime Minister Narendra Modi’s government, which has insisted Kashmir is India’s internal issue and had opposed any third-party intervention, arguing it was fighting “Pakistan’s proxy war.”

Pakistan is trying to raise Kashmir as global issue

Pakistan’s position is that divided Kashmir is an internationally recognized dispute and must be solved according to the UN resolutions and wishes of Kashmiri people.

South Asia analyst Michael Kugelman called Trump’s offer “a diplomatic coup for Pakistan.”

“A core and consistent Pakistani foreign policy goal is to internationalize the Kashmir issue. And that’s exactly what has happened here, much to the chagrin of an Indian government that takes a rigid position that the issue is settled and there’s nothing to discuss,” he said.

Meanwhile, people on both sides of the border have heaved a sigh of relief after the ceasefire but some insisted a lasting peace will only be possible if Kashmir dispute is solved.

Praveen Donthi, senior analyst with the International Crisis Group, said “the two countries have to give Kashmiris a chair at the table of negotiations for a more durable peace process and faster resolution of the problem.” 

He said Kashmiris have lost more lives due to the conflict than government forces on both sides.

“They always have more to lose … in the absence of mechanisms that resolve the Kashmir dispute,” Donthi said.

For residents in Kashmir, the dispute is not just about India and Pakistan, or mere geopolitics and diplomacy, but about survival and peace.

“Let’s be honest, India and Pakistan are fighting over Kashmir. So let it be resolved once and forever,” said student Shazia Tabbasum.


Pakistan to get $1 billion IMF tranche today, no large fiscal impact of India standoff — finmin

Updated 13 May 2025
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Pakistan to get $1 billion IMF tranche today, no large fiscal impact of India standoff — finmin

  • IMF last week approved fresh $1.4 billion climate loan, $1 billion under bailout program 
  • Successful review approval brings disbursements to $2 billion within $7 billion loan program

KARACHI: Pakistan is expected to receive a $1 billion loan disbursement from the IMF today, Tuesday, as part of a larger $7 billion bailout agreement, Finance Minister Muhammad Aurangzeb has said.

The IMF last Friday approved a fresh $1.4 billion loan to Pakistan under its climate resilience fund and approved the first review of its $7 billion program, freeing about $1 billion in cash. The review approval brings disbursements to $2 billion within the $7 billion program. 

In a statement released after a virtual meeting on Monday between Aurangzeb and Johana Chua, head of emerging markets economies for Citigroup Global Markets, the finance ministry confirmed that Pakistan would receive the latest IMF tranche on Tuesday.

“The Minister also apprised the participants of the successful conclusion of a Staff Level Agreement with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF), with the next tranche expected to be received tomorrow [Tuesday],” the statement said. 

“He further mentioned the approval of the Resilience and Sustainability Facility (RSF), calling it a milestone achievement for Pakistan.”

The loan disbursement comes amid a military standoff with arch-rival India, though Aurangzeb told Reuters in an interview on Monday the conflict would not have a large fiscal impact on Pakistan.

The finance minister described the conflict as a “short duration escalation” with minimal fiscal impact, stating it can be “accommodated within the fiscal space which is available to the government of Pakistan.”

When questioned about potential increased military spending in the upcoming budget, Aurangzeb deferred comment, saying it was premature to discuss specific plans. However, he said: “Whatever we need to do in terms of ensuring that our defense requirements are met will be met.”

Aurangzeb said he expects the Indus Water Treaty, which India unilaterally suspended, to be reinstated and rolled back to where it was.

He said there is not going to be any immediate impact from India’s suspension and Pakistan does not “even want to consider any scenario which does not take into account the reinstatement of this treaty.”

Tensions between India and Pakistan began mounting after the April 22 attack in Indian-administered Kashmir on Hindu tourists that killed 26 people, sparking the worst clashes between the nuclear-armed neighbors in more than two decades.

On Saturday, a ceasefire in the Himalayan region was announced by US President Donald Trump, following four days of fighting and diplomacy and pressure from Washington.

Pakistan’s federal budget for the next fiscal year, starting July, will be finalized within the next four weeks, with scheduled budget talks with the IMF to take place from May 14-23, according to the finance ministry. 


With inputs from Reuters
 


OIC welcomes India-Pakistan ceasefire, calls for ‘constructive dialogue’ to resolve issues

Updated 13 May 2025
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OIC welcomes India-Pakistan ceasefire, calls for ‘constructive dialogue’ to resolve issues

  • India and Pakistan used fighter jets, drones, missiles and artillery to attack each other last week
  • OIC calls on India, Pakistan to engage in dialogue in accordance with UN Security Council resolutions

ISLAMABAD: The Organization of Islamic Cooperation (OIC) this week welcomed the ceasefire between India and Pakistan after days of fighting, calling for the nuclear-armed neighbors to engage in “constructive dialogue” to resolve their outstanding issues, Pakistani state media reported. 

US President Donald Trump on Saturday announced India and Pakistan had agreed to a ceasefire after the two countries were engaged in conflict. The two sides used fighter jets, drones, missiles and artillery to attack each other in the worst fighting between them since the 1999 Kargil war, leaving around 70 people dead on both sides of the border.

“The Organization of Islamic Cooperation today welcomed the ceasefire between Pakistan and India and lauded the countries that brought two sides together to finalize the agreement,” state broadcaster Radio Pakistan reported on Monday. 

The global body of Muslim nations called on the international community to “redouble efforts” and encourage Pakistan and India to engage in a “constructive dialogue” to resolve outstanding issues, including the Kashmir dispute. 

It asked both countries to engage in dialogue through peaceful means and in accordance with the relevant United Nations Security Council Resolutions.

“The OIC also reaffirmed its principled and firm position, calling for a peaceful resolution to Jammu and Kashmir issue,” Radio Pakistan added. 

At the heart of India and Pakistan’s dispute lies the Himalayan territory of Kashmir. The disputed region is claimed in full by both India and Pakistan, who only govern parts of it separated by a de facto border known as the Line of Control. 

India and Pakistan have fought two wars out of three since 1947 over Kashmir. India has for years insisted Kashmir is a bilateral issue and not allowed any third-party mediation.

Tensions, however, remain high since Saturday’s announcement by Indian Foreign Secretary Vikram Misri that the 1960 World Bank-brokered treaty would remain in abeyance, signaling deeper diplomatic rifts despite the temporary cessation of hostilities between the two neighbors.

India suspended the treaty, which ensures water for 80 percent of Pakistani farms, a day after the April 22 attack in Indian-administered Kashmir. Islamabad described the Indian move to suspend the treaty as an “act of war.”