Pakistan’s agreement with the International Monetary Fund (IMF) will bring “much-needed stability to the uncertainty surrounding” the country, according to a top Pakistani official.
“We are pretty confident that we will be formalizing (the preliminary agreement) soon,” Pakistan’s Foreign Secretary Asad Majeed Khan told Anadolu in an interview in the Turkish capital Ankara.
Islamabad and the global lender reached a $3 billion stand-by arrangement last week, a long-awaited step to shore up the country’s economy.
The deal, subject to approval from the IMF board in July, will help prop up Pakistan’s depleting foreign reserves and contain a mounting balance of payment crisis.
“First, it will bring much-needed stability to the uncertainty surrounding Pakistan, (the) deficit, and the position of foreign exchange reserves,” said Khan.
Secondly, it will inject critical resources and bring more stability to the exchange rate, which will bolster efforts to rein in inflation, he added.
“We are quite confident that it will give the government the space to undertake the kind of economic actions that we need to make things easier for the people,” he said.
The $3 billion funding, which comes after an eight-month delay, is higher than the remaining $2.5 billion from a $6.5 billion bailout package agreed in 2019, which expired on June 30.
To secure the funding, Islamabad reversed subsidies in the power and export sectors, hiked energy and fuel prices, and increased the key policy rate to 22%.
It also implemented a market-based currency exchange rate, all of which pushed the inflation rate to a record 38% in May, before dropping to 29% last month.
On bilateral ties with Türkiye, Khan said political and people-to-people relations remain at the highest level.
“The volume of investments is not really as significant as it should be,” he said, adding that bilateral trade stood at over $1 billion in the last fiscal year.
“We need to look at ways in which we can basically add substance … that, I think, is warranted because of the long history and the complete trust that our two countries have,” he said.
Khan said his engagements in Ankara were fruitful and the two sides have agreed on a strategic economic framework.
“We would seek to enhance our trade up to $5 billion, and also deepen our cooperation in technology, agriculture and energy,” he said.
Regarding the deadly February earthquakes in Türkiye, Khan said any crisis or tragedy has only brought the two countries closer as they offer each other consistent support and solidarity.
As for Pakistan’s efforts to balance relations with China and the US, he said Islamabad has historically maintained good ties with both powers.
“China has been a very trusted strategic partner. The US is a longstanding friend … our largest export destination and important source of remittances,” he said.
Pakistan is also interested in maintaining good relations with Russia, he added.
“We believe that we don’t need these blocs because that would actually either undercut or undermine our ability to optimally deliver for our people,” said Khan.
The “size of the (global economic) pie is large enough for everyone to share,” he asserted.
Regarding the recent summit of the Shanghai Cooperation Organization (SCO) hosted by India, he said Pakistan views the SCO as an important organization with “a lot of promise and potential.”
Islamabad will continue to participate proactively in SCO activities, he said.
Pakistan is “keen to leverage its geographic location,” Khan further said, adding that the country is eager to diversify its ties across Eurasia.
However, Pakistan’s relations with neighbor and arch-rival India have not seen much progress, according to Khan.
“Unfortunately, in terms of our relationship with India, there hasn’t been much to report,” he said.
“Pakistan has made several gestures, and we believe that the only way for us to move forward is to engage in dialogue.”
India’s unilateral actions in Kashmir have only made things more complicated, said Khan, referring to New Delhi’s August 2019 decision to revoke the region’s special status.
On India’s assertions that the special status is a “thing of the past,” Khan said the statement is “both unfair and not consistent with the legal position on the ground.”
“None of the Indian claims can justify their irrelevance in any way whatsoever. The Indian leadership, unfortunately, has violated even the commitments that they made to Pakistan bilaterally, (and) they have violated commitments made to the Kashmiris themselves,” he said.
“India is seeking to change and alter the demography of Kashmir. We want to seek resolution of issues through dialogue and negotiations,” he said, adding that Pakistan has consistently raised its concerns with the international community.
He said Indian-administered Kashmir remains the “world’s most militarized area” with almost 900,000 Indian troops.
Violations of human rights and any form of repression will not deter Kashmiris in their fight for self-determination, he asserted.
Kashmir, a Himalayan region, is held by India and Pakistan in parts and claimed by both in full.
Some Kashmiri groups have been fighting against Indian rule for independence or unification with Pakistan.
According to several human rights organizations, thousands have reportedly been killed in the conflict since 1989.
India, however, denies it has engaged in any violations by revoking the region’s special status or that it is pursuing a policy of demographic change or repression of the local population.
About the recent desecration of the Quran in Sweden, Khan said such acts are “deeply disturbing” and a complete misrepresentation of the notion of freedom of expression.
He called for individuals engaging in such activities to be isolated, stressing the need for the international community to revisit the legal frameworks that allow for such abuse and incitement that creates animosity.
“They are using these loopholes to create a wedge between communities and religious groups at a time when we need ever greater and ever more interfaith harmony,” he said.
A day after Pakistani lawmakers passed a resolution urging Sweden to take “appropriate steps” against the perpetrators, Khan said the Pakistani nation will come together in a show of solidarity, referring to demonstrations set to be held across the country on Friday.
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