ISLAMABAD: Despite concentrated efforts to avoid the inclusion, Pakistanhas officially been placed on the Financial Action Task Force (FATF) ‘greylist’ on Wednesday. Experts now believe that Pakistan should avoid going tothe International Monitory Fund (IMF) for another bailout package as thelending agency question the country’s sources of foreign funding.
“It is very clear that the IMF, which is ready to facilitate anotherbailout package for Pakistan, will ask about all sources of foreignfundings including the ones coming through the China Pakistan EconomicCorridor (CPEC) after Pakistan’s fall in the grey list,” Federal Board ofRevenue (FBR) former chairman Dr Muhammad Irshad said. He added that thelending agency (IMF), which is influenced by those countries which putIslamabad on the grey list, will demand to share every detail about CPECrelated investments and hence their legalities.
Unfortunately, for wrong policies of the previous government, Pakistan isfast heading towards another bailout package to meet the grave situation ofcurrent account deficits. Defaulting to foreign loans will be moredestructive for the country. “This is why I suggest the government extendthe existing amnesty scheme and provide more facilities to overseePakistanis convincing them to transfer assets to Pakistan. Let thePakistani diaspora enjoy facilities even if undue. The country neededdesperately needed dollars,” he said suggesting further, that a nationaleconomic agenda is needed to be framed on an emergency basis.
“As the previous government estimated around $5 billion revenue to begenerated under the amnesty scheme, we need to let it continue for anotherfew months to ensure more facilities for overseas Pakistanis. In case ofbetter inflows, the country can sustain for more time without IMF’ssupport,” Dr Irshad added.
According to an official at Ministry of Finance (Mof), even after thedecision of putting Pakistan in the grey list again, the country has thegrace period of 12 to 15 months to come out of the list. “What Pakistanneeded was to perform better diplomacy and convince at least five to sevencountries and get favourable votes out of the total 37 countries before thenext meeting of FATF. This time, even friendly countries avoided supportingPakistan under the pressure of the India led lobby,” he said, adding thatthe country had once come out of the list in 2015, it can again leave thelist if adequate measures are taken. Islamabad needed to ensure theimplementation of the action plan shared with the FATF.
Talking about the option of extending the amnesty scheme to pave the wayfor repatriation of foreign assets, sources claim that people, enjoying theextended period may declare money/assets but thera e is little possibilityto bring money back into Pakistan. They may declare assets inside andoutside the country to whiten the black money.
Economists claim that the grey-listing will squeeze Pakistan’s economy andmake it harder for the country to meet its mounting foreign financingneeds, including potential future borrowings from the InternationalMonetary Fund. It could also lead to a downgrade in Pakistan’s debtratings, making it more difficult to tap into the international bondmarkets.
However, officials at the finance ministry claim Pakistan was on the FATFgrey-list from 2012 to 2015, a period during which it successfullycompleted an IMF program and raised over $5 billion from the internationalbond markets. During this period Pakistan’s imports and exports remainedstable, evidence that the grey-listing did not raise any significantbarriers to trade.
“Though the economic team of Pakistan has also shown weaknesses in theentire process of meeting requirements of FATF, a lobby of Pakistan’s enemymay have also played a key role in the decision of putting Pakistan againston grey list,” sources.