President Asif Zardari has said while cash-strapped Pakistan is still averse to resorting to IMF aid, the country must consider the IMF option as a cure for its ailing economy.
Zardari will visit Saudi Arabia tomorrow (Tuesday) for talks with King Abdullah Bin Abdul Aziz, custodian of the two Holy Mosques, to solicit support for the Friends of Pakistan initiative and the oil-facility requested by Pakistan.
Speaking to Saudi Gazette in an exclusive interview ahead of the visit, Zardari said, “Saudi Arabia has always provided assistance to Pakistan in difficult times”. And these are very difficult times for Pakistan, which needs up to $4.5 billion to deal with a balance of payment crisis, raising the prospect that the violence-hit country will default on its foreign debts. “I would solicit Saudi support for the ‘Friends of Pakistan’ initiative,” the president said. “I sincerely hope that with the steadfast support of the Saudi government, it will achieve the desired objectives.”
The ‘Friends of Pakistan’ will meet in Abu Dhabi on November 17 to decide on economic aid for the country, an ally in the global “war on terror”. Pakistan’s friends include Britain, France, Germany, the United States, China, the United Arab Emirates, Canada, Turkey, Australia and Italy plus the United Nations and the European Union.
Additionally, “Pakistan is supported through a series of negotiations by various world economic bodies – World Bank, Islamic Development Bank, Asian Development Bank and the UK’s Department for International Development,” Zardari said, suggesting that options remain open for his country to avoid a loan from the IMF. “Getting aid from the IMF is our last option,” Zardari said. However, he added after a pause “actually, we must consider the IMF option as a medicine that will ultimately cure our ailing economy”. An IMF loan is often tied to stringent conditions, chief of which is elimination of subsidies. In September, the IMF recommended that Pakistan’s fiscal deficit be reduced to 4.7 per cent of the GDP and electricity subsidies be eliminated.
And that’s Zardari’s concern. “In just five years, our oil bill has increased from $3 billion to over $12 billion, thus creating pressures on our balance of payments, he said. “Such an increase is also creating difficulties for our budget as we have tried to protect our people from the rising cost of energy by subsidising fuel and electricity in the given limits of the budget”.
If Pakistan cuts its electricity subsidies as sought by the IMF, its energy bill – for mainly oil – will get passed on to the people, leading to price rises. “Global food inflation is hovering between 35 and 40 per cent and Pakistan is no exception,” Zardari pointed out while explaining his government’s struggle to control food prices in the midst of various initiatives to return Pakistan on a high growth trajectory. “Unfortunately, for decades, Pakistan was being managed by people who had no perspective or imagination,” Zardari said. “Otherwise, Pakistan is rich in all sorts of resources,” he added.
Zardari said fight against terrorism is a long struggle with complex challenges requiring a multi-pronged approach combining political, military and development tracks. “Our view is recognised by our partners. To effectively fight terrorism, he said, a special joint meeting of parliament was convened recently, which unanimously adopted a 14-point resolution on the issue bringing the nation together. “We have also made it clear that incursions inside Pakistani territory by foreign forces are not acceptable. “It only undermines the fight against militancy,” he added. He called Pakistan-Saudi Arabia relations exemplary as clearly manifested by the frequency of high-level visits between the two states.
The president said the leadership from both sides have had unanimity on all bilateral, regional and international issues. This is further reflected in the presence of an over one-million-strong Pakistani community in Saudi Arabia who are contributing towards the progress of the Kingdom and adding to the strength of our mutual friendship, he added.
The president said the multi-faceted cooperation between the two countries is firmly based on institutional linkages, and strong trade and commercial ties. Saudi companies have made significant investments in Pakistan in diverse fields. Our bilateral trade currently stands at around $5.7 billion. He recalled that Saudi Arabia always provided assistance to Pakistan in difficult times.
“The Saudi Fund for Development has been playing an important role in financing various uplift projects in Pakistan,” he remarked. Recently, the Board of Investment, in collaboration with the Saudi Arabia General Investment Authority (SAGIA) and the Council of Saudi Chambers, held two investment moots in Riyadh and Jeddah. The conferences were a big success, attended by around 360 traders and industrialists from both sides. To a question about recent US-India nuclear deal, he said, “we have asked for a level playing field by evolving an objective, non-discriminatory and criteria-based approach for peaceful uses of nuclear energy. He said this is important for preventing an arms race and also for the credibility of international non-proliferation regime.
He assured that notwithstanding the grave implications of the discriminatory agreement, Pakistan would continue to act with responsibility and would not enter into an arms race. “However, we will neither be oblivious to our security requirements nor to the needs of our economic development,” the president added.
Discussing the internal political situation, he said he was sure that since the PPP and the PML-N had come together after a great struggle for democracy and, having learnt a lot from their past mistakes, better counsel would definitely prevail while resolving all the issues.
To a question, the president said, “we had agreed in the ‘Charter of Democracy’ that the defence budget would be placed in parliament. Honouring this commitment, we presented the defence budget in parliament for the first time this year”. Likewise, we had agreed in the CoD that the all-important Public Accounts Committee of parliament, which served as watchdog over the government would be headed by an MP of the opposition. Honouring this commitment, an opposition MP has been made the chairman of the parliament’s Public Accounts Committee. He said as far as the future of the former president Pervez Musharraf is concerned, it would be decided by the parliament. “However, let me also add that we do not believe in taking revenge. We believe that democracy is the best revenge,” he added.